US stock indexes sank on Monday, registering their worst day in months, amid concern about Google Inc's valuation and doubts about holiday spending after a disappointing sales estimate from Wal-Mart Stores Inc.
In addition, downward pressure on the dollar for a fourth straight day hurt demand for US investments, while a rise in crude oil prices above $60 a barrel added to concerns about consumer spending. The Nasdaq suffered its biggest net point decline since September 24, 2003, while the broad Standard & Poor's 500 Index recorded its biggest percentage decline since early June and the blue chip Dow average fell its most since early July.
"The dollar weakness has caught some by surprise, but what's mostly going on is we're getting the first blush of what we might see for Christmas," said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale Illinois. "Wal-Mart has been indicating some weakness for some time, and they are a bellwether for the retailers. It might not just be a Wal-Mart issue".
The Dow Jones industrial average fell 158.46 points, or 1.29 percent, to end at 12,121.71. The Standard & Poor's 500 Index lost 19.05 points, or 1.36 percent, to finish at 1,381.90. The Nasdaq Composite Index slid 54.34 points, or 2.21 percent, to close at 2,405.92.
In another sign of investor worries, the Chicago Board Options Exchange Volatility Index jumped 14.6 percent on Monday. The indicator, also known as the VIX and the market's fear gauge, measures expectations of near-term volatility determined by the Standard & Poor's 500 options prices.
Shares of Wal-Mart, the world's largest retailer, fell 2.7 percent, or $1.29, to $46.61 on the NYSE after it estimated November sales fell 0.1 percent at US stores open at least a year. While stores were busy on Black Friday, with more retailers opening their doors at midnight on Thanksgiving night or even earlier to capture eager shoppers, analysts worry that the high traffic may not lead to fat margins. Wal-Mart started its heavy discounting weeks before Thanksgiving, while other retailers beefed up their promotions just ahead of Black Friday.
Customer foot traffic in stores over the long holiday weekend slipped from last year, the National Retail Federation reported, adding to worries about retailers' fourth-quarter performance. The S&P Retail Index was off 1.1 percent.
Shares of Web search company Google fell 4 percent, or $20.25, to $484.75 and were the biggest drag on the Nasdaq after Barron's said over the weekend that Google's stock may be overvalued.
Ford Motor Co shares fell 4.2 percent, or 36 cents, to $8.16 on the New York Stock Exchange after it announced plans to borrow $18 billion by pledging assets as collateral to fund its restructuring. The dollar's recent decline to a 20-month low against the euro of $1.3172 has raised questions about the attractiveness of US stocks to foreigners.
US crude oil for January delivery climbed $1.08 to settle at $60.32 a barrel. Saudi Arabia's oil minister said Opec may cut output further at a December 14 meeting. Shares of US airlines fell on Monday, with Continental Airlines down 7.3 percent, or $3.31, at $42.07 in Big Board trading, partly on rising oil prices. Shares of AMR Corp, the operator of American Airlines, slid 5.6 percent, or $1.90, to $32.20 on NYSE.
Trading was active on the NYSE, with about 1.62 billion shares changing hands, slightly exceeding last year's daily average of 1.61 billion, while on Nasdaq, about 2.03 billion shares traded, above last year's daily average of 1.80 billion. Advancing stocks outnumbered declining ones by a ratio of more than 4 to 1 on both the NYSE and the Nasdaq.