NEW YORK — It's still the economy, stupid.
That was the message from the raw-nerved stock market Thursday as immediate economic concerns overtook the fate of the government rescue package in investors' minds.
The bailout saga had dominated the market for weeks as investors hoped for a way out of the banking crisis.
But the Dow Jones industrial average tumbled almost 350 points Thursday as new data illustrated that the rest of the economy was on shaky ground and probably wouldn't be helped right away by a financial-system bailout.
"What we're dealing with is, for lack of a better term, a manic-depressive market," said Chris Johnson, chief executive of Johnson Research Group in Cincinnati. "The manic side is the frenzy to buy on [news of] the government bailout, and the depressive side is 'The government can bail out the financial system but can't bail out the economy.' "
The Dow tumbled 348.22 points, or 3.2%, to 10,482.85. It was the Dow's 12th triple-digit move in the last 14 trading days.
The Standard & Poor's 500 index skidded 46.78 points, or 4%, to 1,114.28, and the Nasdaq composite index sank 92.68 points, or 4.5%, to 1,976.72.
Economically sensitive sectors such as industrial, commodity and transportation companies were hit hard. The Dow Jones transportation index was hammered, falling 8.7%.
The stock of trucking firm Con-Way Inc. was the biggest loser. It fell $8.78, or 20.5%, to $34.16 after the San Mateo, Calif.-based company late Wednesday slashed its 2008 operating earnings forecast to a range of $2.60 to $2.80 a share, from a previous range of $3 to $3.40.
Yields on Treasury securities receded as jittery investors once again sought out the safety of government debt. The yield on the three-month T-bill fell to 0.6% from 0.81%. The two-year note declined to 1.62% from 1.82%.
Commodity prices were off sharply on the assumption that slow growth, particularly overseas, would tamp down demand for crude oil, copper and wheat. A closely watched commodities index fell 4.3% and is down 9.9% this week.
The credit markets tightened further, showing little benefit from the Senate's passage Wednesday night of the $700-billion rescue bill.
The House of Representatives is expected to vote on the revised measure today, but investors were taking nothing for granted after that chamber's unexpected defeat of the initial version of the measure Monday.
"It's an I'll-believe-it-when-I-see-it," said Al Goldman, chief market strategist at Wachovia Securities.
The Commerce Department reported that factory orders fell 4% last month, far worse than the 3% expected. The original 1.3% gain estimated in July was revised down to a paltry 0.7% pickup.
Initial claims for jobless benefits rose to a seven-year high, the Labor Department said. That raised concern about the closely watched monthly unemployment number to be released this morning.
The factory data came on the heels of Wednesday's awful figures on September auto sales. Most automakers reported sales off more than 20% from a year earlier.
A Wall Street Journal article reporting that the Federal Reserve was considering additional interest rate cuts may have buoyed the market. But the article also reinforced the notion that the Fed's multiple steps this year hadn't lifted the economy out the doldrums.
The mood was worsened by new data showing the difficulty that companies were having getting access to short-term credit at reasonable rates.
The so-called Libor index of the interest rates banks pay one another for one-month loans rose to 4.05% from 4% on Wednesday. The rate, which influences the rates businesses pay on some loans, was below 3% less than three weeks ago.
In the market for commercial paper, a core financing mechanism for businesses, the amount of debt outstanding shrank to $1.61 trillion in the week that ended Wednesday, down 5.6% from the week before, the Federal Reserve reported.
Shares of General Electric Co. fell $2.35, or 9.6%, to $22.15 after the company late Wednesday sold $12.2 billion in stock at the below-market price of $22.25 a share.
GE also sold $3 billion in preferred shares to Warren Buffett's Berkshire Hathaway Inc. on Wednesday.
In the industrial sector, farm machinery leader Deere dropped 14%, Los Angeles-based Reliance Steel lost 16%, and mining giant BHP Billiton slumped 11%.
Times staff writer Tom Petruno contributed to this report.
S.O.S.: State may need an emergency loan. Page A1
Anticipation: House is to vote again today. Page A1