Stocks Take Record Tumble, Down 777 Points

House Rejection Of $700B Rescue Plan Sparks Steep Nosedive On Wall St.; Dow Suffers Largest One Day Loss In History

(CBS/AP)  Wall Street watched Washington with shock and fear as the bailout package flamed out on Capital Hill.

And as that $700 billion financial rescue plan went down, the Dow went down like a sub, hurtling the Dow Jones industrials down nearly 780 points in its largest one-day point drop ever, reports CBS News correspondent Anthony Mason.

"Nobody could believe it," said Ted Weisberg of Seaport Securities. "The fact that it did not get done is just mind-boggling." The result on Wall Street was a history-making 777-point nosedive. The Nasdaq plunged almost 10 percent.

"Wall Street is of the view something needs to be done," said Steve Masocca of Pacific Growth. "Investors are of the view something needs to be done. And it didn't get done."

The financial crisis, meanwhile, continued to spread. Wachovia, burdened with bad mortgage loans, averted disaster by selling out to Citigroup. Cleveland based National City, hit by fears it could be the next victim, saw its stock plunge more than 60 percent today. Overseas economies also felt the reverberations, Mason reports. The British government had to seize a distressed mortgage bank. And the Belgian-Dutch bank, Fortis, was rescued in a $16 billion bailout.

"The clock is ticking," said economist Mark Zandi. "We need to have some relief very rapidly."

Zandi says the credit markets are still frozen, and Main Street could feel the effects within weeks.

"I've heard from numerous businesses that they're running out of cash to operate their everyday business," Zandi said. "So that means if they don't get relief from their bankers soon, in the next few days or couple of weeks, they will be laying off workers and shutting operations."

Among 160 companies in danger of defaulting over the next 12 months, according to Standards Poors are: United Airlines parent UAL; General Motors; Six Flags; and Trump Entertainment Resorts.

Meanwhile, the Federal Reserve pumped $630 billion into the global financial system Monday, flooding banks with cash, trying to keep the crisis from worsening, Mason reports.

Credit markets, whose turmoil helped feed the stock market's angst, froze up further amid the growing belief that the country is headed into a spreading credit and economic crisis.

Stunned traders on the floor of the New York Stock Exchange, their faces tense and mouths agape, watched on TV screens as the House voted down the plan in mid-afternoon, and as they saw stock prices tumbling on their monitors. Activity on the floor became frenetic as the "sell" orders blew in.

The Dow told the story of the market's despair. The blue chip index, dropped by hundreds of points in a matter of moments, and by the end of the day had passed by far its previous record for a one-day drop, 684.81, set in the first trading day after the Sept. 11, 2001, terror attacks.

The selling was so intense that just 162 stocks rose on the NYSE
and 3,073 dropped.

It takes an incredible amount of fear to set off such an intense reaction on Wall Street, and the worry now is that with the $700 billion plan fate uncertain, no one knows how the financial sector hobbled by hundreds of billions of dollars in bad mortgage bets will recover.

While investors didn't believe that the plan was a panacea, and understood that it would take months for its effects to be felt, most market watchers believed it was a start toward setting the economy right after a credit crisis that began more than a year ago and that has spread overseas.

"Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group. "This isn't a market for the timid."

The plan's defeat came amid more reminders of how troubled the nation's financial system is - before trading began came word that Wachovia Corp., one of the biggest banks to struggle due to rising mortgage losses, was being rescued in a buyout by Citigroup Inc. It followed the recent forced sale of Merrill Lynch & Co. and the failure of three other huge banking companies - Bear Stearns Cos., Washington Mutual Inc. and Lehman Brothers Holdings Inc.; all of them were felled by bad mortgage investments.

And it raised the question: Which banks are next, and how many? The Federal Deposit Insurance Corp. has a list of over 110 banks that were in trouble in the second quarter, and that number surely has grown in the third.

According to preliminary calculations, the Dow fell 777.68, or 6.98 percent, to 10,365.45. The decline also surpasses the 721.56-point intraday decline record also set during the first trading day after the terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.

Broader stock indicators also tumbled. The Standard & Poor's 500 index declined 106.85, or 8.81 percent, to 1,106.42.

The technology-heavy Nasdaq composite index fell 199.61, or 9.14 percent, to 1,983.73.

[hbevis]

Don''t be suprised if this happens...
ACTION ALERT: [supposedly] info from DNC SOURCE NOT VERIFIED
Hi all,
Let me share some info with you that I have gotten from excellent sources
within the DNC:
On or about October 5th, Biden will excuse himself from the ticket, citing
health problems, and he will be replaced by Hillary. This is timed to occur
after the VP debate on 10/2.
There have been talks all weekend about how to proceed with this info.
Generally, the feeling is that we should all go ahead and get it out there
to as many blog sites and personal email lists as is possible. I have
already seen a few short blurbs about this - the ''health problem'' cited in
those articles was aneurysm. Probably many of you have heard the same
rumblings.
However, at this point, with this inside info from the DNC, it looks like
this Obama strategy will be a go. Therefore, it seems that the best
strategy is to get out in front of this Obama maneuver, spell it out in
detail, and thereby expose it for the grand manipulation that it is.
So, et''s start mixing this one up and cut the Obamites off at the pass -
send this info out to as many people as you can - post about it on websites
and blogs - etc.

[mcv57]

With or Without Bail-Out, economy will slow. The money scheme is only to make the Bushwacker and the Presidential Elect look good ... oh yeah to keep the crooked, corrupt, lazy, useless 100,000 government workers working.

I can''t believe they are using that Tickle Down B.S. with this plan. PEOPLE ARE STUPID, if you go for that in one generation!

[observantx]

Check out the interview that Lou Dobbs gave on the CNN Website.

Boy, did he nail it.

[kenammons]

no bailout for fat cats. no further mortgaging the future of this nation for the greedy few. no to the evil doers

[kenammons]

we can only hope and pray that the house will hold firm and reject again the evil bush and pelosi are trying to do to the people of this great nation. bailing out well connected wall street types is wrong as millions of decent americans lose there homes. surely a just god will deal harshly with the 205 demons that would do such a thing

[noloyalisti]

Trickle Down Economics is dead (AGAIN). The entire Republicon scheme of free market is a failure. As if we didn''t know. Rest in peace Milton Friedman, Grover Norquist, Ron Ray Gun and the rest of the privatization freaks.

[txgrouch2006]

777 is usually a jackpot win in slots but meant just the opposite yesterday. I am retired--
Posted by future121 at 01:32 PM : Sep 30, 2008

No, you''re not. You were DOWNSIZED. Laid off. FIRED FOR BEING TOO OLD.

I got the same boot BEFORE 9/11 when the stock market dropped in March/April.

Remember, "overqualified" means there''s a slight chance you could find another job somewhere else, which would limit their ability to coerce you into doing all the unscrupulous things they want to force their employees to do. You probably had a reputation for having "too much" integrity, too. They can''t use someone like that.

Don''t look now, but the stock market is up over 400 points tody. That erases more than half of the triple-seven drop of yesterday.

[wl7bzh]

n It''''s really hard to see when your head is buried so deep in the sand....

Posted by msay3 at 08:25 AM : Sep 30, 2008


Deep in the sand? Permit me an observation, but I don''t believe the sand is where much of Congress has it''s head stuck.

[whitemale08]

777, that''s the air you hear coming out of this phony debt-bubble based economy and the fake billionaires!!!!

Good riddance, I want to see all of these so-called Warren Buffets and Bill Gates hit the unemployment lines and the soup lines and behave like the rest of us.

[future121]

777 is usually a jackpot win in slots but meant just the opposite yesterday. I am retired--no pension just my iras which I have lost 30%. If this keeps up I will be on welfare since social security does not kick in until age 62 at the minimum and I am 57. I retired one week after 9-11. I would have stayed but was not allowed since the reason I retired was due to "reduction in force" in otherwords I was forced to retire. I am working part time am a widow since I lost my husband 6 months before 9-11. I have tow adult children one is on his own now but the other has student loans which I currently pay for him since he has been unable to find work. This crisis is well beyond wall street. Wake up!

[maine11111]

That''s what this country gets!!! Im glad this happened. It will teach the fat cats in washington and these other companies that the little people do have a voice!!!!!!

[noloyalisti]

All of a sudden the Republicons want government regulation, what a joke!

The chickens have come home to roost on the completely failed conservative scheme of privatization. Let those scum go down with their companies. Who is going to jail for this fraud anyway? NO BAILOUT FOR THE RICH SCUM!!!!

[txgrouch2006]

Democrats voting for bailout legislation: 140
Republicans voting for bailout legislation: 65

Democrats voting against the legislation: 95
Republicans voting against the legislation: 133

Posted by MissWasilla at 10:14 AM : Sep 30, 2008

But wait - I thought everyone agreed the bailout is BAD.

So it''s GOOD to vote against it. Right?

LOOKS LIKE THE REPUBLICANS ARE LISTENING TO THE PEOPLE.

The Democrats are BAILING OUT THE FAT CATS, including THEMSELVES!! And they''re IGNORING THE OVERWHELMING PUBLIC OPPOSITION to it.

The Democrats are trying to keep the ball rolling for DEBT, DEBT, AND MORE DEBT. Just a continuation of their ruinous "affordable housing" agenda that CAUSED THIS MESS.

[old300d]

Buy GE

[easeup-2009]

Posted by jellicogirl at 10:00 AM : Sep 30, 2008


You didn''t, by chance, say this?:

%u201CI personally believe, that U.S. Americans,
are unable to do so, because uh,some, people out there, in our nation don%u2019t have maps, and uh%u2026
I believe that our education like such as in South Africa, and the Iraq, everywhere like such as%u2026
and, I believe they should uh, our education over here, in the U.S. should help the U.S. or should help South Africa, and should help the Iraq and Asian countries so we will be able to build up our future,
for us.%u201D

[jellicogirl]

Well see I think this is alot of b-s couse all this stuff would not be happening. I think that if people would just look up and see that this place is make money off you any way they can even if it take the last dime of your money as long as they got money witch and see if something happens look and see who will always have the cash.

[easeup-2009]

Hmmmm, when the filthy rich lose money the market takes a "tumble" but when you and I lose our shirts on our own house it''''s just a "correction".

Posted by pirmin3 at 09:22 AM : Sep 30, 2008

Why do you people think only the "filthy rich" are tied to the market? What about all the people with retirement funds, 401k''s, etc. Also, what about all the union pension funds invested in stocks?

I''ll bet you wear a name tag at work......

[ray999999]

everything was fine untill a few oil execs decided lets gouge the stupid americans and make them pay five dollars a gallon of gas,untill goverment takes control of the oil industry it will get worse.oil execs are the new terroist.

[leftyintexas]

BYE BYE republiCONS!!!

[bikerb54]

Let''s see, we gave tax credits to companies that took jobs overseas and away from the US workers, we went into a country that "didn''t" have WMD''s, we pumped money into Saudi Arabia and other oil pumping countries (like they needed more money), then we wondered why the US consumer didn''t spend more money on goods! Because you took our jobs away, which in return cut the amount of money we can spend on luxuries and necessities! DUH!!!! So... we are rewarding companies for taking jobs and money from the American workers and helping the people that made the choice to live beyond their means! Job security has gone the way of $1 per gallon for gas! Learn to plan for the future, not bank on "what might happen"!