Wall Street Falls To Fresh Lows As Dow Closes Below 8,000

New York, NY (AHN) - Weak economic data sent U.S. markets lower in early trading, but a late sell off sparked by FOMC comments pushed the Dow below 8,000 and the S&P 500 to a fresh 5 year low.

The markets were in sell mode from the open with the Commerce Department reporting a 4.5 percent drop in new-home starts for October.

The Labor Department also provided worrisome data, reporting a 1 percent drop in its Consumer Price Index (CPI), the largest monthly drop since records were kept in 1947. The big fall in consumer prices has already put thoughts of deflation into investors' minds.

Selling accelerated in the afternoon after the Federal Open Market Committee (FOMC) released the minutes from its Oct. 29 meeting. The committee drastically reduced its economic outlook for 2009, providing a range of -0.2 to 1.1 percent growth. Original forecasts had the economy growing by at least 2 percent.

The Dow Jones Industrial average fell 427 points or 5 percent to settle at 7,997, marking the first close below 8,000 since March 2003.

All 30 Dow components finished Wednesday lower. The financial components weighed heaviest on the Dow with Citigroup and Bank of America down 23.4 percent and 14 percent, respectively.

The S&P 500 fell 52 points or 6.1 percent to close at 806, a fresh 5 year low. Of the 500 S&P stocks, only eight of them posted a gain on Wednesday. Subsequently, all 10 major economic sectors finished the day lower. The financial sector weighed most, falling 11.5 percent.

Tech did not fare any better with the Nasdaq Composite falling 96 points or 6.5 percent to 1,386, also marking a 5 year low for the composite. For a third consecutive day, semiconductor stocks weighed on tech with the index dropping 7.7 percent.

Crude oil fell to a 22 month low, sliding 77 cents a barrel to settle at $53.62.

Thursday's market will see the release of initial unemployment claims for the week ending Nov. 15.