Wall Street plunges on Bernanke's warn, weak data
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Wall Street plunged Thursday with the Dow Jones Industrial Average dropping more than 300 points on recession concerns after Bernanke's comment and weak data.
Stocks opened higher but quickly gave up their gains after the Philadelphia Federal Reserve said its survey of regional manufacturing activity registered a negative 20.9 from a revised reading of negative 1.6 in December.
Fed Chairman Ben Bernanke, testifying before the House Budget Committee, warned the risks of an economic downturn have grown more pronounced .
The Commerce Department said Thursday housing starts plunged 14 percent to 1.01 million in December, marking the weakest pace of home building in more than 16 years. In addition, permits to build new homes dropped 8 percent last month to 1.07 million, the lowest level since 1993.
Credit concerns also dogged Wall Street after rating agency Moody's Investors Service placed bond insurer Ambac Assurance Corp. on review for a possible downgrade.
The Dow Jones industrial average was down 306.95 points, or 2.46 percent, to 12,159.21. The Standard & Poor's 500 Index was down39.95 points, or 2.91 percent, to 1,333.25. The Nasdaq Composite Index was down 47.69 points, or 1.99 percent, to 2,346.90.
Merrill Lynch & Co. on Thursday posted a massive loss that underscored the depth of the economy's credit problems. The world's largest brokerage said it lost almost 10 billion U.S. dollars in the fourth quarter, hurt by massive write-downs from investment and trades battered by the ongoing credit crisis. Shares of Merrill fell 10 percent.