ECONOMY: Dow finishes below 10,000 for first time since '04
By JOE BEL BRUNO and TIM PARADIS - Associated Press | ∞
NCT Staff NEW YORK ---- Wall Street joined in a worldwide cascade of despair Monday over the financial crisis, driving the Dow Jones industrials to their biggest loss ever during a trading day. Even a big afternoon rally failed to keep the Dow from its first close below 10,000 since 2004.
The sell-off came despite the $700 billion U.S. government bailout package, which was signed into law Friday after two weeks in which traders had appeared to count on the rescue as their only hope to avoid a market meltdown.
At its worst point, the Dow was down more than 800 points, an intraday record. The stock market rallied during the final 90 minutes of the trading day, and the Dow finished down about 370 points, at 9,955.50.
Speculation among traders late in the session that the market's pullback had been severe enough to force the Federal Reserve into taking other steps to soothe the markets helped stocks rebound from their lows.
The global plunge in stocks was under way well before Wall Street ever woke up. In Japan, the Nikkei average lost more than 4 percent. And then the losses spread across Europe ---- nearly 6 percent for the FTSE-100 in Britain, 7 percent for the German DAX and more than 9 percent for France's CAC-40.
In the United States, President Bush twice made unscheduled remarks on the economy, saying in Cincinnati that the economy would be "just fine" but that the bailout package needed time to work.
The troubles that started with an overheated housing market in the U.S. have infected financial markets around the world, making banks fearful of lending to other banks, let alone to businesses and consumers. That has led to worries that economies around the world might not only sputter but slide into reverse.
The crush of selling Monday came exactly one week after the Dow lost 778 points, its biggest closing loss in terms of points. On that day, the House voted down an earlier bailout package that had appeared to be a safe bet to pass.
The swings in the Dow on Monday also marked the beginning a fourth week of tumult in the markets. Triple-digit Dow swings have been commonplace since mid-September, when investment house Lehman Brothers went bankrupt and the government stepped in to bail out insurer American International Group.
Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits. U.S. investors appeared worried that the bailout would not be enough to jump-start the economy. Even other steps, including a Federal Reserve decision to expand a loan program to squeezed banks, didn't help much.
The sharp one-day tumbles over the last two Mondays don't come close to the drops that became black marks on the timeline of Wall Street history. Black Monday, in October 1987, and stock drops that preceded the Great Depression were more than 20 percent. Monday's drop, by comparison, was less than 8 percent at its worst.
For the day, the Dow lost 3.6 percent. The selling was broad: Little more than 200 stocks finished the day higher on the New York Stock Exchange, while about 3,000 finished lower.
As an indication of how fearful investors still are, government-backed debt was in high demand. The yield on the three-month Treasury bill, which moves in the opposite direction as its price, fell to 0.49 percent, from 0.5 percent late Friday. Investors are willing to accept low returns to have their money in a secure place.
Investors also moved into longer-term Treasury bonds as they fled the stock market. The yield on the 10-year note fell to 3.45 percent, from 3.6 percent late Friday.
Broader indexes also plunged. The Standard & Poor's 500 index shed 42.34, or 3.85 percent, to 1,056.89; and the Nasdaq composite index fell 84.43, or 4.34 percent, to 1,862.96. The Russell 2000 index of smaller companies dropped 23.49, or 3.79 percent, to 595.91.
Consolidated volume on the NYSE reflected the frantic pace of the day's trading: 7.81 billion shares changed hands, up from Friday's 6.52 billion.
The market "is displaying one of its worst traits with a herd mentality, and investors have an appetite for feeding on fear," said Anthony Sabino, a professor of law and business at St. John's University. But he cautioned it was still not a nightmare scenario.
"Most certainly, this is not the Great Depression of the 1930s, but (is like) the savings and loan crisis of the 1980s ---- and we bailed them out," he said. "Once people catch their breath, they'll see this is the proper analogy and this will breathe life back into banking institutions."
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
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Dems 4 Barack wrote on Oct 6, 2008 9:58 AM:My man, Barack, signed this Bail out plan and now the stock market is crashing!
I am Barack Obama and I APPROVED this bill! :)
local osider wrote on Oct 6, 2008 10:32 AM:what happened to home owners being considered in this plan??? Until the idiots that took these mortgages are dealt with our 401ks are gonna slide...
hold on wrote on Oct 6, 2008 10:37 AM:here we go, bail-out or no bail-out we are in for long ride down,hey wait a minute let our congress pass another bail-out bill, I'm going to write a book
My Struggle
American Independent wrote on Oct 6, 2008 10:45 AM:I seem to remember the "terrorists" claiming they wanted and would disrupt our economy with their attacks...With this being remembered...Are we really safer after 8 years of Bush? His leadership facilitated a forum for american people to believe that there was only one way for us to be unsafe...from others terrorist attacks...the truth is that our narrow minded short term view of the world is as dangerous if not more dangerous to ourselves than our way of dealing militarily with everyone who opposes our views. Bush took his eye off the ball and pointed to a whole different game for us to watch...He told the american people to go and buy stuff to support our economy....Now we can see what we have become... up and coming bankrupt socialists...and the disease spreads to our friends and allies across the world. If it werent for the possibility of new leadership the next 8 would be even longer than the last 8. John McCain hasnt got the faintes idea what to do on the economy and he admits it!!! OBAMA 08!!!!!!!!!!!!!
The Bozos wrote on Oct 6, 2008 11:42 AM:who voted for this should be ran out of office. This country is based on capitalism not comunisism! Those who pushed Fannie May and Freddie to loan money to those that couldn't afford it, Democrats, should be forced to resign. The head of the Banking and Finance committees, Frank and Dodd, should be reassigned to head up the bathroom cleaning committee. This is a disgrace to the citizens of this country. Those that took these loans and knew they couldn't pay them back need to be held accountable along with those giving the loans.
Help on the way wrote on Oct 6, 2008 12:03 PM:What a crock. Personally, I will try to vote out anyone who voted on that bailout. Stocks continue a down turn. Hundreds of economist said don't do it. The government is not constituted to bail out private business, socialism will be on the rise along with everything else. What ever happend to work hard and get rewarded? This whole thing says, "work stupid, have bad investments and we'll bail you out". This is one very unhappy American citizen losing all faith in our government.
Depressed and broke wrote on Oct 6, 2008 12:47 PM:Bozo said "Those that took these loans and knew they couldn't pay them back need to be held accountable along with those giving the loans." and I totally agree! Those of us now aged 60-70 have worked hard, played honest, believed and trusted. We'd like to retire; we deserve to retire, but our savings are GONE - ALL GONE! We don't have decades to 'wait and hope' that 'things will turn around." Socialism will NOT work; it will kill our ethics, flush 'freedom' down the drain. Our home is now worth less than we paid for it (with a legitimate loan/not sub prime, our 401K and stock (held for over 30 years) are GONE! Who's being 'bailed out?...PLEASE vote Republican - the lesser of two evils.
John E wrote on Oct 6, 2008 1:09 PM:As a society, we have been living beyond our means for a long time, making a major market correction inevitable. Since the government has decided to go the Big Government Bailout route, I anticipate a repeat of the late 1970s "stagflation."
Gee wrote on Oct 6, 2008 1:19 PM:I guess state employees can kiss their paychecks goodbye.
Old Guy wrote on Oct 6, 2008 1:48 PM:Trickle down with no trickle. 30 years of deregulations of airlines, financials, communications etc has brought havoc to all those industries. The last eight years of funneling money to the top while the top built factories overseas (with our monry) and sent our jobs overseas. At least the last six years of "stupid" deregulation giving the boys at the top all the money and Las vegas rules to play with it. This has been the stupidity of Supply Side economics gone bad. In the meantime, family wealth has went down, oersonal and family debt is busting budgets and it is time to pay the piper. Some would argue that supply side economics is as natural as gravity, but they are confusing a man made social science with the natural laws of a natural science. Instead, it is just a failed political belief that keeps this type of economic structure continuing to destroy our country. Coolidge/Hoover and now Bush and maybe McCain. If we only had Dwight Eisenhowers brand of conservatism, we would not be in a silly war, not have this crazy economics and have a sound budget in this country. Neither McCain nor OBama are the savior of the next four year. Thanks to an insane economic policy, we all will be suffering for many years to come.
Charlie wrote on Oct 6, 2008 2:17 PM:The travesty will be when one person who took a mortgage when they could not meet the payments gets bailed out along with the tack on to the mortgage a rider for the cost of a new car. In addition the illegals that received mortgages should be taken to the border and turned lose on the other side.
I am tired of this crooked stuff. I work hard for what I have, and it ain't much, but i am proud that I got it the honest way.
No crooked person should be bailed out - regardless of who they are. The crooks should go to jail, the illegals should go back to there own country.
I say to my Representatives and Senators in Congress, GET ME OUT OF THIS MESS with out me paying for one other persons debts - or else! and I want to hear what you have to say before the next election.
To OLD GUY wrote on Oct 6, 2008 2:48 PM:Sorry to say this latest mess was not caused by Supply Side Economics. It was caused by Socialist activities put forth by the Democrats and Jimmy Carter back in the 70's who believed everyone should own a home whether they could afford it or not. Thus Fanny and Freddie formed and were told and in some cases given quotas to give loans to minorities and low income people. This led to Government backing these loans so everyone started getting in on the action and selling the loans the Freddie and Fanny. In 2004 Rep Barnet Franks assured all the better days for these companies were ahead and pressed them to make even more bad loans. Result people couldn't pay now the house of cards comes tumbling down. If Supply side concepts were used these loans would not have been made in the first place. Supply side depends on a free running economy where people work for and obtain things they can afford. If they want more they learn more and work more. It is not dependant on government handouts.
this all wrote on Oct 6, 2008 3:04 PM:won't matter come dec.12 2012, look it up.......end of days
I guess we can wrote on Oct 6, 2008 3:23 PM:kiss the Escondido Christmas Parade off, huh?
Jsten wrote on Oct 6, 2008 3:26 PM:Sheesh-who saw that one coming?
Lets see, starting with the A's....
JSten wrote on Oct 6, 2008 3:30 PM:All sing along:
"I'm plowed to be a poor american,
I have no stocks to lose,
My retirement went to Enron
My house is now gone too(-se)"
C'mon Everybody sing!
(embrace the horror)
Thanks wrote on Oct 6, 2008 4:24 PM:Bush. I'm so proud of my north county neighbors who watch FOX news and voted and stand up for this clown. Now I have to hear how they're all voting McCane/Palin. We deserve this.
Herb wrote on Oct 6, 2008 6:56 PM:The question is, when the bailout - par-dona me - the rescue starts to work, who is going to get rescued?
Is it going to be the illegal down the street who can't meet his mortgage payments and had a $30,000 rider attached to his mortgage and bought a car with it. If so, I would just as soon let things ride without the rescue and ride out the recession or depression whatever may come. We are being robbed, and robbed again, and robbed again by the same people. if I could I would call Alexander Hamilton forward and have him take care of Barney Frank, his boy friend at Fannie Mae, and all the others who are involved in the destruction of my country.
How come Obama wrote on Oct 7, 2008 7:22 AM:wanted to sign this bill, didn't he know what was to follow? Now we will have everybody, illegals included who couldn't afford a home like most of us, with near free homes. Is this America?
Keep it simple wrote on Oct 7, 2008 7:24 AM:Protect bank deposits and money market accounts, then let the chips fall where they may. The companies that were prudent with their money and investments can pick-up the pieces (if they so desire).
Austrian School wrote on Oct 7, 2008 9:18 AM:"Herb
[-] wrote on Oct 6, 2008 6:56 PM:
If I could I would call Alexander Hamilton forward and have him take care of Barney Frank, his boy friend at Fannie Mae, and all the others who are involved in the destruction of my country."
Actually Hamilton would have probably liked Barney and friends, they would have been buddies in the Hamptons. He was for a big federal government and a central bank. Now Arron Burr would have busted a cap on Barney though. At times like these I think Thomas Jefferson says it best: The only thing more dangerious to libery than a standing army is a central bank.
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