(ABC News Photo Illustration)
Stocks decline amid global worries credit crisis is spreading; Dow falls below 10,000
By JOE BEL BRUNO AP Business WriterNEW YORK October 6, 2008 (AP)
The Associated Press
Wall Street suffered through another traumatic session Monday, with the Dow Jones industrials plunging as much as 800 points and setting a new record for a one-day point drop as investors despaired that the credit crisis would take a heavy toll around the world. The Dow also fell below 10,000 for the first time since 2004, and all the major indexes fell more than 7 percent.
The catalyst for the selling was the growing realization that the Bush administration's $700 billion rescue plan and steps taken by other governments won't work quickly to unfreeze the credit markets. Global banks, hobbled by wrong-way bets on mortgage securities, remain starved for cash as credit has dried up.
That sent stocks spiraling downward in the U.S., Europe and Asia, and drove investors to sink money into the relative safety of U.S. government debt. Fears about a global recession also caused oil to drop below $90 a barrel; and the benchmark index that gauges fear in the market jumped to the highest level in its 18-year history.
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"The fact is people are scared and the only thing they're doing is selling," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working."
The selling was so extreme that only 67 stocks rose on the NYSE — and 3,155 dropped. That's a telling sign considering the stock market is considered a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.
The Associated Press
Wall Street suffered through another traumatic session Monday, with the Dow Jones industrials plunging as much as 800 points and setting a new record for a one-day point drop as investors despaired that the credit crisis would take a heavy toll around the world. The Dow also fell below 10,000 for the first time since 2004, and all the major indexes fell more than 7 percent.
The catalyst for the selling was the growing realization that the Bush administration's $700 billion rescue plan and steps taken by other governments won't work quickly to unfreeze the credit markets. Global banks, hobbled by wrong-way bets on mortgage securities, remain starved for cash as credit has dried up.
That sent stocks spiraling downward in the U.S., Europe and Asia, and drove investors to sink money into the relative safety of U.S. government debt. Fears about a global recession also caused oil to drop below $90 a barrel; and the benchmark index that gauges fear in the market jumped to the highest level in its 18-year history.
Related
Stopping a Crash: How Stock Trades Halt
Oil Falls as Financial Turmoil Spreads
EBay to Cut 1,000 Jobs
"The fact is people are scared and the only thing they're doing is selling," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working."
The selling was so extreme that only 67 stocks rose on the NYSE — and 3,155 dropped. That's a telling sign considering the stock market is considered a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.
Monday's steep decline on Wall Street indicates that investors are becoming more convinced that the country is leading a prolonged economic crisis that is spreading to other nations. 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.
As the U.S. tries to repair its battered banking system, the German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG. And France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed.
