The Dow Jones Industrial Average closed more than 20% below its October 2007 peak on Wednesday, meaning it is officially a bear market. The blue-chip index fell 166.8 points or 1.46% to 11,215.5, which is 21.0% below its 14,198.1 close on 11 October.
The biggest drag on the index was General Motors, which fell below 10 US dollars a share for the first time since September 1954. The S&P 500 index closed just shy of 20% below its peak levels. One surprising thing about the entry into bear market status is the reminder that the Dow Jones was so high in October, when the sub-prime crisis was already well underway. The peak came less than a week after the investment bank Merrill Lynch revealed 5.6 billion US dollars in sub-prime losses. Soaring petrol prices have turned US drivers away from large, fuel-intensive vehicles, once prioritized by GM, in favor of smaller and crossover cars. GM acknowledged recently that soaring petrol prices were "changing consumer behavior" and pledged a greater focus on smaller, more fuel-efficient models. GM has lost a combined 51 billion US dollars over the past three years and recently said it would not return to profitability, as previously hoped, in 2008. Should GM shares continue to slide experts have said the firm is in danger of falling out of the Dow Jones Industrial Average index of leading US stocks. GM has been a member of this prestigious club since 1925. But other stock markets have not fared much better: in China the Shanghai Composite index lost 20.31% last June and overall in Europe the main markets were down on average 10% last month. In Latinamerica, Brazil's Bovespa lost 10.44% in June; Argentina's Merval 4.4% and Chile's IPSA reported its worst first half of the year since 2002.