Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since Oct. 28, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997.
All the major indexes slid more than 3 percent. The Dow is just over 100 points from 7,000.
"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.
"The decline has been broad-based and brutal," says CBS News correspondent Anthony Mason. "For example, you can buy a share of GE now for less than the cost of a lightbulb. You can buy a share of GM for less than the cost of a gallon of gas. And you can buy a share of the New York Times Company for less than the cost of a Sunday paper."
Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.
Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They're also worried that banks' losses will keep escalating as the recession sends more borrowers into default.
"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."
The Treasury and other agencies issued a statement after The Wall Street Journal reported that Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government's plans.
"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."
Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.'s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.
"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.
The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. The major indexes plunged through the lows they reached in late November, at the height of the credit crisis.
"There's no main driver of the down day," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's just so much skepticism in the overall market and (the question is) is the government doing proper things to get us out of this problem. Obviously the stock market is voting no."
According to preliminary calculations, the Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on Oct. 28, 1997 when it finished at 6,971.32. The Dow hasn't traded below the 7,000 mark since October 1997.
The Standard & Poor's 500 index fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.
Jason Weisberg, director of floor operations for Seaport Securities, told CBS Radio News that long-term investors have been effectively driven from the market.
"We need to see if we stay below these 12-year levels - whether this is an anomaly or whether we're going to continue to go lower," he said.
The technology-laden Nasdaq composite index dropped 53.51, or 3.71 percent, to 1,387.72.
The Russell 2000 index of smaller companies fell 16.38 or 3.99 percent, to 394.58.
Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares compared with heavy volume of 2.12 billion shares on Friday.
Among tech stocks, Hewlett-Packard Co. fell $1.96, or 6.3 percent, to $29.28, and Intel Corp. dove 70 cents, or 5.5 percent, to $12.08.
Other big decliners included General Electric Co., which dropped to a 14-year low of $8.80, but ended down 53 cents, or 5.7 percent, at $8.85. Aluminum producer Alcoa Inc. tumbled 48 cents, or 7.6 percent, to $5.81.
Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America Corp., which gained 12 cents, or 3.2 percent, to $3.91.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.79 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.28 percent from 0.26 percent Friday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $1.59 to settle at $38.44 per barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.95 percent, and France's CAC-40 slipped 0.82 percent. Earlier, Japan's Nikkei stock average fell 0.54 percent.