Stocks Plunge Amid Market Pessimism

Dow Falls About 350 As Unemployment Rises, Factory Demand Falls; Bailout Wariness Persists

(CBS/ AP)  Pessimism about a protracted economic downturn washed over the financial markets Thursday, sending stocks plunging and further tightening the credit markets. News of declining factory orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan won't ward off a recession, and the Dow Jones industrials skidded nearly 350 points.

Investors appeared to be pulling more money out of Wall Street and settling in for a prolonged economic winter. The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and the latest economic reports delivered Thursday show that the economy continues to struggle.

The government said the number of people seeking unemployment benefits rose last week and that demand at the nation's factories has fallen by the largest amount in nearly two years. The market is interpreting the Commerce Department report on factories as a sign that tight credit conditions are hitting manufacturers.

"The economy is what's driving this weakness," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates. "I think now what's going on is a focus on the economic weakness in a whole bunch of areas."

He also said "the next couple of days are going to be pretty intense politically" as Wall Street girds for another vote on the financial bailout plan.

On Wall Street, the Dow fell 348.22, or 3.22 percent, to 10,482.85. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished modestly lower Wednesday; still the Dow has had triple-digit swings every day this week.

Broader stock indicators also fell sharply Thursday. The Standard & Poor's 500 index fell 46.78, or 4.03 percent, to 1,114.28, and the Nasdaq composite index fell 92.68, or 4.48 percent, to 1,976.72.

The bill that passed the Senate late Wednesday will be sent to the House as soon as Friday. The latest version of the bill adds $100 billion in tax breaks for businesses and the middle class and raises the limit on federal deposit insurance to $250,000 from $100,000.

Supporters are hoping the sweetened bill will be more palatable to some of the 133 House Republicans who rejected the measure in a vote Monday that took Wall Street, and many on Capitol Hill, by surprise.

Those in favor of the plan to let the government buy billions of dollars in bad mortgage debt and other now-soured assets say it will help unclog the world's ailing credit markets. Banks are fearful of making loans, even to each other, because of worries they won't be repaid. That, in turn, is weighing on the economy, making borrowing more difficult and expensive for businesses and consumers alike.

The credit markets showed some increased strain Thursday. The yield on the 3-month T-bill, the safest type of investment, fell to 0.70 percent from 0.79 percent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.64 percent from 3.74 percent late Wednesday.

The stock market is a leading economic indicator of sorts, because investors tend to buy and sell based on where they believe the economy will be six months or more in the future. Thursday's big drop points to a market increasingly resigned to further economic instability whether or not the bailout plan becomes law.

"There are a lot of people who think regardless of a bailout, there's still this economic data and the horror stories out there," said Todd Salamone, director of trading at Schaeffer's Investment Research. "Certainly, there's a negative psychology."

Investors might get another grim reading about the economy on Friday when the Labor Department releases its September jobs report, one of the most closely watched indicators. The September non-farm payrolls report from the Labor Department is expected to show a loss of 100,000 jobs, according to a median estimate from economists. That would be the ninth straight month that the economy has lost jobs.

Meanwhile, banks and investment firms ramped up borrowing from the Federal Reserve's emergency lending facility over the past week, providing fresh evidence of the credit stresses squeezing the country.

(Traders crowd the post that handles General Electric on the floor of the New York Stock Exchange, Oct. 2, 2008.)

The Fed's report released Thursday said commercial banks averaged $44.5 billion in daily borrowing over the past week. That compared with a daily average of $39.36 billion in the previous week.

For the week ending Wednesday, investment firms drew $147.7 billion. That was up significantly from $88.15 billion in the previous week. This category was broadened last week to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.

The Fed report also showed that $122.1 billion worth of loans were made to money market mutual funds - via banks - to help the funds, which have been under pressure as skittish investors demand withdrawals.

Billionaire investor Warren Buffett said the U.S. has been hit with an "economic Pearl Harbor," and the government must respond quickly. "That sounds melodramatic, but I've never used that phrase before. And this really is one," Buffett said in an appearance on the "The Charlie Rose Show" on PBS stations.

The Labor Department reported Thursday that initial claims for unemployment benefits rose by 1,000 last week to a seasonally adjusted 497,000, above expectations for a 475,000 increase. That's the highest seen since the immediate aftermath of the Sept. 11, 2001, terrorist attacks, and unnerved investors worried about not only about strains in the financial market but also the effect on the broader economy.

Beyond employment, the government reported that orders for manufactured goods fell by 4 percent in August from July. Economists had expected a 2.5 percent decline. It is the biggest drop since a 4.8 percent decline in October 2006.

The dollar was higher against other major currencies, particularly the euro, even after the European Central Bank left interest rates unchanged. Higher interest rates in Europe generally make the euro more attractive to investors than the dollar.

The European Central Bank left its key interest rate unchanged Thursday amid concerns over inflation but explored the option of lowering the rate as the financial crisis increasingly affects the continent. The ECB is also considering a bailout of the region's financial system, similar to what U.S. lawmakers are considering.

That left open the question that policymakers globally might be less focused on fighting inflation, and instead trying to come up with short-term solutions to stimulate the economy.

"At some point, you have to face the realities that we have some serious problems and there aren't going to be any quick fixes," said Ryan Larson, head of equity trading at Voyageur Asset Management. "Even if bailouts pass, the fact remains that it might get credit flowing again but won't solve the broader issues out there."

The Russell 2000 index of smaller companies fell 33.92, or 5.05 percent, to 637.67.

Declining issues led advancers by a 3 to 1 margin on the New York Stock Exchange, where volume came to 1.21 billion shares.

[iphyt4u]

Give me liberty, give me opportunity, and do not favor the wealthy. No Bail Out!

[be_real]

PULL THE TROOPS FROM IRAQ ASAP, WE NEED THE MONEY.

[incog-nito]

Maybe it''s time to get back to hunting, gathering, and foraging for protein sources.

[hypnotoad72]

GET READY FOR THE SOUP LINES FOLKS!!

Posted by Hacker11001
---

Get a grip. And I don''t mean on your ankles.

[netadmin1-2009]

tell you what - you guys sell your stocks - other''s will buy them and laugh when the market comes back up - and make no mistake about it - it will come back up.

[incog-nito]

How am I going to clean my glasses?

Posted by donnie7948 at 05:10 PM : Oct 02, 2008

If you have to wear glasses then you probably wouldn''t survive very long anyway.

[marshall_nee]

Nobody in their right mind calls 100 million dollars ''''chump change''''..

Posted by donnie7948 at 05:18 PM : Oct 02, 2008

We''re in the era of Quadrillions now buddy.

[generey]

Oh gawd people snap out of it. It will go up again tomorrow. Up, down, up, down. It aint anything but a game to scare the kids before they go to bed. It''s all fixed.

[samthetvcat]

---"The main concern is that the $700 billion bailout plan won''t be enough to stimulate growth"---

What are they saying, they want more? :(

The global economy started slowing down when the price of oil started going up. It''s come down since, but I think that''s still the root of the problem.

Not only did hope to see the bailout to be a loan plus trusteeship of the bad stocks to limit the government''s risk to bankruptcy, I was hoping Government would push for the money to be used to get going with nuclear power and off-shore drilling.

It''s a waste of scarce resources for banks to be lending money out as a convenience and substitute for savings of a nation that''s gotten out of the habit of delaying gratification.

[legacyabq]

If corporations hadn''t moved manufacturing overseas, then money spent for goods would stay here in the U.S., and american workers would be getting the wage to make those goods. Sure, its a little cheaper to manufacture goods in china, but at what long-term cost to the economy??
American corporations are greedy traitors.
Bring back the factories!
Only buy products that say on the label
MADE IN THE USA
not communist china!!
So we might pay 5 to 10% more for things, so what??
Its better than this ***, where our economy is unstable and the value of the dollar is heavily affected by overseas monetary trading.
Keep america storng, corporations.. Stop selling your souls to foreign nationals for a slightly increased profit margin!!
In the long run, we ALL benefit from domestic manufacturing, and the extra money we pay is well worth it to keep american workers employed, and keeping dollars circulating in OUR economy, not China!

[gwjackie]

Wall-street they act like a bunch of little kids. Iwonder how much more it would drop if they were told hell-no no money now no money ever the American people are sick of you and congress. And buy the way the country,s that you took this money from CAN COME AND GET YOU NO QUESTIONS ASK! I THINK THIS PLAN WILL WORK.

[gce65]

They''re throwing a temper tantrum to show congress they''re worried if they don''t get the big bailout. It''ll only be the first of many bailouts if Congress takes the bait.
Paulson and Bush know they''ll be gone in 4 months anyway and someone else will have to fix the mess.

[marshall_nee]

If ya see me kiss''''n a gargoyle, you''''ll warn me right?

Posted by donnie7948 at 05:24 PM : Oct 02, 2008

gargoyle?

Who are you donnie?

Batman?

[incog-nito]

Well there might still be jobs left for Americans at home, jobs like blacksmith or weaver.

[sashenka1]

It does appear, well after the hogs are outside the lot and wasting away, some hurried-greedy overseers left most of the gates open far too long. No need to close them now. We need a newly constructed lot and new overseers.



"Nearer my God to thee"...and the Band Played On even after Randy Shilts'' death. It''s still playing.

Disgusted and anticipating the economic worst...


Sashenka1

[samthetvcat]

---"If corporations hadn''t moved manufacturing overseas, then money spent for goods would stay here in the U.S., and american workers would be getting the wage to make those goods. Sure, its a little cheaper to manufacture goods in china, but at what long-term cost to the economy??"---
Posted by LegacyABQ

Yeah, all the experts went to school back before the economy went global, so all the lessons learned from the 80''s and 90''s are obsolete. Trickle down and trickle up all trickle out - some of it trickles back, but the money flow is global now. Time to update the model!

[gwjackie]

TURN THESE PEPOLE OVER TO ALL THESE COUNTRY,S THAT LOST THERE MONEY ALL THE CEO,S PEOPLE ON WALL-STREET AND BUSH AND CHENEY TOO IF YOU CAN CATCH THEM!

[staplesla]

It isn''t too late. Let your voice be heard!

Call your Congress member at [phone], and send an email here at www.votenobailout.org.

Contact the media as well. Flood them with emails. The media will hopefully start reporting the sentiment and it could have a change.

email addresses:
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],


http://www.cnn.com/feedback/cnntv

[incog-nito]

You know, the Senators who voted against the bill, did they do it on principle? Or are they holding out for more pork? Hmmm...

[rcgreene1]

Netadmin1 says: %u201Ctell you what - you guys sell your stocks - other''s will buy them and laugh when the market comes back up - and make no mistake about it - it will come back up.%u201D This is true and it shows the strength of the current brokerage system for those who can afford to lose a lot of money waiting for the system to revive. It also points out one of the truly nasty flaws of the system %u2013 ME FIRST %u2013 MAKE A PROFIT FROM THE DISADVANTAGED. And of course the rich %u2013 those with seriously good credit and even borrow the money to buy up falling stock and pay it back when the market revives. The Wall Street / Financial System is really, really dirty bad. Worse yet, we really are so entrenched in the system that we have to bail it out, because the Wall Street machos can afford hibernate for awhile as all the working Joes and Janes lose their jobs, small businesses, and hopes for the future.

We as a nation of practical but concerned human beings can%u2019t simply let the system die, even if it means helping those who should be sacrificing to help us. I just hope Congress can eventually close down the short-selling and hedge market schemes and prosecute the offenders!

[gwjackie]

THE 700 BILLION BUSH ASK FOR THAT

[joefoolswat]

We''ve got to stay the course with McCain!

He''s the only one who can complete Bush''s vision for the future of America!

[legacyabq]

I got news for you Shannon Jane,o your a victim of propaganda. Obama is no Carter.
And those steel mills you complain about?
The EPA is not to blame. The corporations of america moved manufacturing jobs OVERSEAS to make more money.
Obama wants those jobs BACK in USA.
You should be praising him!
What the hell is this 3 trillion dollar tax increase your talking about? Where do you get this?
You are sounding pretty brainwashed: have you considered the possibility that you are just a parrot, spouting propaganda that rush limbaugh came up with?
Do you really think domestic drilling will solve anything long term? first, theres really not that much oil to drill. second, it will run out eventually anyway. New economic growth based on new energy and technology will be a dependable, clean source of good-paying jobs for many years. Whats wrong with that?
Are you perhaps just a racist, or perhaps a mcCarthyesque paranoic, who thinks that democrats are socialists? theres no reason to think that way. Your just a clone, a non-thinking robot who doesnt understand reality. Or would you rather load coal and die of pneumonia/black-lung, for your stupid "steel mill".
I dont understand people like you. Why do you like acid rain? Dont your kids live on this planet?
Why would you NOT want a secure energy economy, based on U.S. ingenuity, not foreign oil? Do you love oil so much? Do you cry for it? Are you sad for oil?

[marshall_nee]

Time to withdraw money out from banks is now, let''''s learn the lessons from 1929''''s.

Posted by niceface69 at 05:36 PM : Oct 02, 2008

We already are, if you go on whats happened with Washington Mutual and Whackovia.

[walt1944-2009]

I have always suspected that the neocon Fascist Nazi Republican grand scheme of things was to march our country BACKWARD to the days of the horse & buggy for transportation, hunting and farming for our suppers, and using a barter economy instead of worthless paper.

To them, there is only a 2 class society with the "haves" and have-nots" and the "have-nots" are in the majority.

The danger of that is, as history has shown time and again, you can only push the "have-nots" so far, before they start pushing back and that push back is called REVOLUTION.

If I remember right, that''s the way this country was founded back in 1776!

SIG HEIL, I SLEPT THRU HISTORY!, BUSH!!!
sig heil, I REMEMBER 1776 BECAUSE I WAS THERE!!!, McBush!!!
sig heil, MY "FIRST DUDE" WILL TAKE CARE OF EVERYTHING!, Palin!!!

[marshall_nee]

What kind of a business school teaches its students to exessively spend and not raise taxes?

Posted by donnie7948 at 05:39 PM : Oct 02, 2008

Harvard.

[marshall_nee]

Where''''s the money coming from, fer all these wars and stuff?

Posted by donnie7948 at 05:40 PM : Oct 02, 2008

Outta thin air probably, and created by the Fed.

[tmittelstaed]

For the vast majority of Americans, personal credit has only TWO legitimate uses:

a) To purchase a home that is their primary residence

b) For a sudden, unexpected, and necessary expense that isn''t going to reoccur, and is within the ability of the person to pay back within 2 years

For EVERYTHING ELSE people must SAVE their money until they can buy what they want.

HERE is what Americans have ABUSED credit for:

a) flipping homes
b) paying utility bills
c) "treating" themselves to some luxury they would never buy if they had to save up the money
d) buying jewelry
e) buying non-essential items
f) Buying new cars instead of a used car that is just as reliable but costs a tenth of the price
g) paying for gasoline
h) buying food
i) Paying enormous medical bills that they have no insurance for and that will never be able to repay

BUSINESS credit is a different matter - but abuse of business credit by businesses didn''t cause this meltdown.

It would be a very GOOD thing for people in the country to be weaned off abuse of credit

[marshall_nee]

You can''''t have no money coming in, and a whole buncha money going out. Right? Thats a magic act or something..

Posted by donnie7948 at 05:42 PM : Oct 02, 2008

Ponzi act.

[Harvybing]

OUR BAIL OUT CRISIS WAS CAUSED BY A HANDFUL OF CORRUPT CONGRESSMEN AND A HANDFUL OF EQUALLY CORRUPT FANNIE MAE OFFICIALS. THEY BOUGHT UP $ 7 TRILLION IN BAD DEBT IN ORDER TO PAD THE BOOKS AND COLLECT HUGE SALARY BONUSES.

HERE ARE THREE VIDEOS THOSE CORRUPT FANNIE MAE OFFICIALS & AT LEAST FIVE CORRUPT GOVERNMENT OFFICIALS DON''T WANT THE AMERICAN PEOPLE TO SEE:

http://www.youtube.com/user/TheMouthPeace


http://www.youtube.com/watch?v=_MGT_cSi7Rs


http://www.youtube.com/watch?v=q2WKtp01yOw


Do Your Part And Pass These Videos Along To Everyone You Know

[livewire190]

McCain hates you unless you are rich. FACTS:

1. McCain%u2019s economic plan gives Big Oil a $4 billion tax break while 101 million working families get no relief at all. Source: Tax Policy Center, Preliminary Analysis Of The 2008 Presidential Candidates%u2019 Tax Plan, 6/20/08; Center for American Progress Action Fund, 3/27/08

2. John McCain supports tax breaks for companies that send American jobs overseas. This year, we%u2019ve lost more than 600,000 American jobs to outsourcing. Source: John McCain 2008, %u201CJobs for America,%u201D; %u201CThe McCain Budget Plan,%u201D Washington Post, 7/14/08; USA Today, 3/20/08 Vote 63, 3/17/05; Vote 83, 5/5/04; Vote 517, 10/26/95

3. John McCain will continue George Bush%u2019s tax cuts for the wealthiest Americans while the middle class struggles with stagnant wages and rising prices. Source: MSNBC/FAU GOP Debate, 1/24/2008



--------------------------------------------------------------------------------

Posted by azure11 at 05:54 PM : Oct 02, 2008

dont foget he said he considers anyone making $5 million and up are considerd rich.

[stee1962]

ShannonJane6 wrote:
"How may houses do i have, the class envy facre the liberals use when their losing", "OBAMA the "SOCIALIST" in 08 for the 2nd CARTER TERM!!!", etc.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Put a sock in it, sister.
The GOP has had their turn at bat.

[incog-nito]

Oh well. The American dream is probably overrated anyway.

[livewire190]

Everybody check out "What Jack Carrferty Really Thinks Of Sarah Palin" on youtube. A Must See! Funny Stuff!!!

I think I spelled his name right. Mabey not.

[talk2chief]

It is time for Economic Darwinism.

Congress needs to decide if it represents the people or the dysfunctional corporate elites who deserve failure. Forget the failing operations that currently affect 401K''s, other well managed banks and financial institutions will lead, forget the lobby dollars and do the right thing and reject the spending bill. Send a clear message to the top 1% of Americans, %u201CIf you fail, the taxpayer will no longer bail you out.%u201D

[livewire190]

Everybody check out "What Jack Carrferty Really Thinks Of Sarah Palin" on youtube. A Must See! Funny Stuff!!!

I think I spelled his name right. Mabey not.

[livewire190]

Everybody check out "What Jack Carrferty Really Thinks Of Sarah Palin" on youtube. A Must See! Funny Stuff!!!

I think I spelled his name right. Mabey not.

[incog-nito]

talk2chief: Congress has already decided, and it''s not the people.

[xmanborg]

Palin Bingo Cards. PRINT EM UP AND PLAY PALIN BINGO TONIGHT during the debate.

www.palinbingo.com

[xmanborg]

Palin Bingo Cards. PRINT EM UP AND PLAY PALIN BINGO TONIGHT during the debate.

www.palinbingo.com

[stn_sage]

This story demonstrates what many of us against the bailout have been saying: that whether or not hundreds of billions or trillions of dollars are pumped into the system, it will make little or NO positive difference!

As long as the same, stupid, greedy people are left running it, and any semblance of rules are not applied, it will NEVER IMPROVE!

Now, that''s the story, the result, and the future ALL rolled into one!

I''m outta here!

[hypnotoad72]

Pessimism is not going to do anybody any good.

I will be taking a leap of faith; not just with investing but exercising as well. I AM going to get some guts and rid of my gut. For my health and to reduce the number of statistics in this country.

If I can do that, then this country can turn its financial mess around too. A survivor of two molestations, beatings, and other very nasty things, I will do my part.

No more negativity, people. Please. Even Roosevelt said something about fear and how it is far more potent than the reality surrounding.

[praiseallah1]

The Bailout Tick you off too?

Do something about it before it''s too late! Email your Senator and Congressman and DEMAND they vote NO to Bush''s $700 Billion Bailout to Wall Street Firms! We taxpayers already paid Billions in bailouts for AIG, Bear Stearns and others firms and the market is still whole. Now Politicians come on TV saying the same rehearsed talking points to SELL this fraud to Mainstreet but if it''s so DIRE than WHY are leaders adding Billions in wasteful Pork to the Bill.

Go watch these videos documenting the fraud of our elected officials http://wallstreetmarketnews.blogspot.com/2008/10/democrates-defend-fanniefreddie-scam.html

[aaabee-2009]

bad for us is that congress has become invertebrate... they are a *** for lobbies and big money. Posted by sincityq at 06:09 PM : Oct 02, 2008

You are so right. 20 months of Dem majority Congress has caused all this. Poor Bush and the Republican majority Congress that bloated our deficit for 6 years had nothing to do with it.

Vote Palin for President and she''ll fix it?

[libluv2cnsor]

You know how much it costs to make a ipod? 10 bucks. I''''ll wait till the market is down to about 5,000. Then I''''ll buy. Cuz thats what its really worth.


--------------------------------------------------------------------------------

Posted by donnie7948 at 06:21 PM : Oct 02, 2008
+ report abuse


**********

and you know why we are having problems?? because people are so bitter that they dont want to buy..
cause and effect..

[whodotcom]

800 billion dollars = $400,000 for every adult over 18 years of age.
WOW, seniors could retire, really.
College students could pay for college.
Goverment could tax it at 50% and get half of it back immediately.
State Governemnt could get $40,000
Local government gets $4,000

What would retirees do with $156,000?

go traveling abroad
buy stuff
buy stuff from other countries.
Not have to eat dog food.
Not have to live with their selfish children.
Live anywhere they want.

Single moms could afford day care, college, tennis shoes, food, good place to live, their dignity.

Rich people, what would they do, re-invest, buy expensive stuff. Pay their taxes with the money.

What would working couples do
Save for their children
Feed their children
Cloth their children
Buy a home
Buy a car that gets 40 miles per gallon.

Who would loose, fat, undeserving white men on Wall Street. But they would also get $400,000 each.

How do we finance this, China is ready to buy bonds, Europe is ready to buy bonds, Rich Arabs are ready to buy bonds, every country is ready to buy bonds to help the US.

We fall they fall

Where would we spend the money? buy more stuff from China, take a trip to Europe, buy more oil and gas to heat our homes.

Nobody looses.

[staplesla]

It isn''t too late. Let your voice be heard!

Call your Congress member at [phone], and send an email here at www.votenobailout.org.

Contact the media as well. Flood them with emails. The media will hopefully start reporting the sentiment and it could have a change.

email addresses:
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],
[e-mail],


http://www.cnn.com/feedback/cnntv

[republic1776]

This is all a dog and pony show!
The rich want you to think doom!
As they say in Prison, "Shake Down"
Republican''s and Democrats are the same beast!
Both are Scumbags, who sell out our Nation everyday day for self-intrerest''s
Fight Democrat''s Vs. Rebublicans!
GAME OVER!
Write in a vote for Mr. Ron Paul. 2008

[incog-nito]

and you know why we are having problems?? because people are so bitter that they dont want to buy..
cause and effect..

Posted by libluv2cnsor at 06:38 PM : Oct 02, 2008

If you follow that logic, then the people are so bitter because...?

[republic1776]

Every Member of the House is up for re-election!
Show them that thier plans to scare America back-fired.
Fire them on November 4th.