Stocks in U.S., Europe Slump With S&P 500 Index at Lowest Level Since 1996

[Purveyor]

By Cristina Alesci and Jeff Kearns

March 5 (Bloomberg) -- U.S. and European stocks tumbled, driving the Standard & Poor’s 500 Index to the lowest level since 1996, after Moody’s Investors Service said it may cut JPMorgan Chase & Co.’s credit rating and China quelled speculation the government will add to its stimulus plan.

JPMorgan dropped 14 percent as lenders led the plunge. Wells Fargo & Co. and Bank of America Corp. slumped 12 percent after Moody’s said it’s reviewing their ratings, while Citigroup slipped below $1 for the first time. General Motors Corp. sank 15 percent after its auditor said the automaker may not survive. European stocks fell after Aviva Plc, the biggest U.K. insurer, reported a loss.

“People are abandoning equities as an asset class,” Scott Minerd, who helps oversee about $30 billion as chief investment officer at Guggenheim Partners Asset Management in Santa Monica, California. “The market is trying to cope with the idea of lower earnings prospects and that the economy won’t turn around in the near term.”

The S&P 500 lost 4.3 percent to 682.55. The Dow Jones Industrial Average decreased 281.40 points, or 4.1 percent, to 6,594.44. Europe’s Dow Jones Stoxx 600 Index fell 3.6 percent to 161.59. Treasuries rallied, driving the yield on 10-year notes down to 2.82 percent from 2.97 percent, and the U.S. dollar index climbed 0.6 percent.

Concern corporate defaults will rise, the deepening global recession, and dividend cuts at companies from General Electric Co. to JPMorgan have dragged the S&P 500 to three consecutive weeks of declines, pushing the index down 24 percent this year. It has fallen 7.2 percent since Feb. 27.

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