Stocks Take Record Tumble, Down 777 Points
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.
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. 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.
Popular on CBSNews.com
-
Photos: Underground shots of NYC's Second Ave. subway project New York City's Second Ave. subway was first conceived almost a century ago and when it is completed, it will extend all the way down the eastern side of Manhattan with 16 new stations. CBS News' Don Dahler reports on one of the most challenging public works projects in the country.
- Day care worker accused of drugging snacks for nap-time
- Report: U.S. teacher training an "industry of mediocrity"
- Shock as alleged Nazi unit leader, 94, found in U.S
- FAA approval sought for 650-foot-tall Vegas thrill ride
- Girl who lost feet in lawnmower gets prosthetics
- Feds digging in Mich. field for Jimmy Hoffa's remains
- Church shooting in Ogden, Utah not a random act of violence Play Video
- Report: Pregnant workers face routine discrimination
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.
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!
Boy, did he nail it.
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.
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.
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.