NEW YORK -- Wall Street plunged again and credit markets remained tight today after declining factory orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan might not be enough to ward off a recession. The Dow Jones industrials fell more than 300 points.
Investors appeared to be pulling more money out of the market and settling in for a prolonged economic winter. The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and the latest economic reports delivered Tuesday show that the economy continues to struggle.
The government said the number of people seeking unemployment benefits rose last week and that demand at the nation's factories has fallen by the largest amount in nearly two years. The market is interpreting the Commerce Department report on factories as a sign that tight credit conditions are hitting manufacturers.
The credit markets showed some increased strain today.. The yield on the 3-month T-bill, the safest type of investment, fell to 0.70 percent from 0.79 percent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.65 percent from 3.74 percent late Wednesday.
Investors might get another grim reading about the economy on Friday when the Labor Department releases its September jobs report, one of the most closely watched indicators. The September non-farm payrolls report from the Labor Department is expected to show a loss of 100,000 jobs, according to a median estimate from economists. That would be the ninth straight month that the economy has lost jobs.
The Dow fell 314.69, or 2.91 percent, to 10,516.38 after earlier falling more than 350. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished modestly lower Wednesday; still the Dow has had triple-digit swings every day this week.
Broader stock indicators also fell sharply today. The Standard & Poor's 500 index fell 41.25, or 3.55 percent, to 1,119.81, and the Nasdaq composite index fell 80.86, or 3.96 percent, to 1,988.54.
Light, sweet crude fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange. Gold and other commodities also declined during the session.
The Labor Department reported today that initial claims for unemployment benefits rose by 1,000 last week to a seasonally adjusted 497,000, above expectations for a 475,000 increase. That's the highest seen since the immediate aftermath of the Sept. 11, 2001, terrorist attacks, and unnerved investors worried about not only about strains in the financial market but also the effect on the broader economy.
Beyond employment, the government reported that orders for manufactured goods fell by 4 percent in August from July. Economists had expected a 2.5 percent decline. It is the biggest drop since a 4.8 percent decline in October 2006.
The dollar was higher against other major currencies, particularly the euro, even after the European Central Bank left interest rates unchanged. Higher interest rates in Europe generally make the euro more attractive to investors than the dollar.