Stocks Suffer Sixth Straight Day Of Losses

Dow Closes Down 190 Pts. As Wall St. Remains Rattled Despite News Of Emergency Rate Cut

(CBS/AP)  A stock market empowered by an emergency interest rate cut tried to find some stability Wednesday, rallying several times before another late-day drop left Wall Street down for the sixth straight day. Still, the pullback, while fed by comments from Treasury Secretary Henry Paulson, was milder than the massive declines of earlier in the week.

The Standard & Poor's 500 index, the market measure most closely followed by traders, fell 1.13 percent - compared to a 3.85 percent slide Monday and a 5.74 percent drop Tuesday. The Dow Jones industrials fell 189 points, a number that while sizeable was less frightening than the 875 it lost over the first two days this week.

Trading was erratic right from the opening bell, after the Federal Reserve and other leading central banks cut rates in the hope that credit markets would soon relax and that banks would begin lending more freely to businesses and consumers. The Fed lowered the target for its federal funds rate by a half-point to 1.5 percent from 2 percent, saying in a statement that the turmoil in financial markets posed a further threat to an already shaky economy; it was joined in the rate cut by the European Central Bank, Bank of England, The Bank of Canada, the Swedish Riksbank and the Swiss National Bank.

Investors had been hankering for a rate cut, and they were clearly happy with the central banks' actions. However, they were also aware that in the near term, the credit markets remain tied up because banks are reluctant to lend.

"The financial institutions are having an anxiety attack," Stuart Hoffman, an economist at PNC Financial, told CBS News. "In and of itself [the rate cut] won't be enough, but it's part of a lot of stuff the Fed has thrown on the wall to see what sticks."

That mix of emotions had the major indexes wavering between gains and losses until Paulson in late afternoon financial markets remain severely strained. He also said it would be several weeks before the government's $700 billion financial rescue plan makes its first purchases of banks' troubled mortgage-backed assets.

Paulson's comments showed how vulnerable the market is, and how it can shoot up or down in minutes. The S&P 500 index, up more than 20 points at 3:35 p.m. EDT, tumbled to a loss of 11 by the 4 p.m. closing bell.

"Until we have some more confidence here it's going to be difficult to sustain any rally," said Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa. "Unfortunately you probably sell the rallies for a little while until we run out of sellers."

Meanwhile, the Federal Reserve agreed to provide insurance giant American International Group with a loan of up to $37.8 billion, on top of one made to the troubled company last month.

The Dow Jones industrial average ended down 189.01, or 2.00 percent, at 9,258.10.

Broader stock indicators also fell. The S&P 500 index slid 11.29, or 1.13 percent, to 984.94, and the Nasdaq fell 14.55, or 0.83 percent, to 1,740.33.

With its precipitous drop of the past few weeks, Wall Street is approaching the magnitude of the losses it suffered during the bear market in the early part of this decade. By the time the Dow reached its low of that market, 7,286.27 on Oct. 9, 2002, it had fallen 37.8 percent from its record high close of 11,722.98, set in January 2000.

The Dow has now fallen about 35 percent from the closing high of 14,164.53, reached a year ago Thursday. This week alone, the Dow has lost 1,067 points, or 10.3 percent. It has lost 1,592.56, or 14.68 percent over the past six sessions.

The worries on the Street have been exacerbated by the spread of the U.S. credit problems overseas. Several banks in Europe have had to be bailed out, and earlier this week, the governments of Germany, Ireland and Greece took steps to guarantee private bank deposits.

Moreover, the markets are mindful of the fact that the government's $700 billion financial rescue plan is in its early stages of implementation and will take some time to have an impact on banks' balance sheets.

David Wyss, chief economist for Standard & Poor's, said the heavy losses in stock markets around the world signal that markets are determining that the credit crisis won't likely be resolved soon.

"There was a general disregard for risk going on in financial markets around the world, it wasn't just the U.S.," he said. "Now they're waking up to risk."

Investors had been anxious in recent days for a rate cut, and despite the Fed taking other steps this week to help the credit markets. Policymakers unveiled a plan to buy massive amounts of commercial paper, the short-term debt used by companies, in a bid to reanimate the credit markets.

It is likely that stocks won't begin to recover for good until investors are certain the credit markets are functioning in a more normal fashion. There are also severe economic problems including heavy job losses and high unemployment that will also need to show improvement.

The uncertainty in the market has driven investors to buy up anything deemed safe, including gold and government debt. For instance, prices of gold shot up $22.60 to $904.60 - though still off its record of $1,033.90 in March.

Demand for short-term Treasurys remained high because of their safety; investors are willing to take extremely low returns just to have their money in a secure place. The yield on the three-month Treasury bill, which moves opposite its price, dropped to 0.66 percent from 0.81 percent late Tuesday.

However, longer term Treasury bonds fell because they are considered to be less attractive when the Fed cuts rates. The yield on the 10-year note rose to 3.70 percent from 3.51 percent late Tuesday.

The first third-quarter earnings reports are showing signs of strain on companies, and that is adding more uncertainty to the stock market. After the close Tuesday, Alcoa Inc. said it would conserve cash by suspending its stock buyback program and all non-critical capital projects. The aluminum company's earnings fell 52 percent.

Shares of the company fell $2, or 12 percent, to $14.71, by far the steepest decline among the 30 that comprise the Dow industrials.

Recession worries are hitting retailers as well, reports CBS News business correspondent Anthony Mason. Three out of four major retailers reported disappointing sales.

Wal-Mart Stores Inc. said sales rose in September but issued a tepid forecast for October. Often discounters do better than other retailers during tough economic times so the forecast from the world's largest retailer caused some worries about overall retail demand. Wal-Mart fell 29 cents to $54.55.

Luxury retailers turned in a generally weak performance. Saks Inc. fell 96 cents, or 13 percent, to $6.24 after sales fell more than Wall Street had expected.

Declining issues were narrowly ahead of advancers on the New York Stock Exchange, where volume came to a heavy 2.13 billion shares.

The Russell 2000 index of smaller companies fell 12.38, or 2.21 percent, to 546.57.

European indexes had a short-lived bounce after the rate cut. In Britain, the FTSE-100 ended down 5.18 percent, Germany's DAX dropped 5.88 percent, and France's CAC-40 dropped 6.31 percent.

In Asia, Japan's Nikkei 225 closed 9.38 percent lower and Hong Kong's Hang Seng tumbled 8.17 percent hours before the rate cuts were announced; their declines showed the extent of the worldwide gloom. And Russia's two main stock exchanges were suspended because of a massive sell-off right after their openings.

[truthislife1]

BELOVED, I now write to you this second epistle (in both of which I stir up your pure minds by way of reminder), that you may be mindful of the words which were spoken before by the holy prophets, and of the commandment of us, the apostles of the Lord and Savior, knowing this first: that scoffers will come in the last days, walking according to their own lusts, and saying, "Where is the promise of His coming? For since the fathers fell asleep, all things continue as they were from the beginning of creation." For this they willfully forget: that by the word of God the heavens were of old, and the earth standing out of water and in the water, by which the world that then existed perished, being flooded with water. But the heavens and the earth which are now preserved by the same word, are reserved for fire until the day of judgment and perdition of ungodly men. But, beloved, do not forget this one thing, that with the Lord one day is as a thousand years, and a thousand years as one day. The Lord is not slack concerning His promise, as some count slackness, but is longsuffering toward us, not willing that any should perish but that all should come to repentance.
2Peter 3:1-9

[truthislife1]

The bible is just one religion''''s book. It is not the only opinion out there. People have been saying "the bible predicted it" about EVERYTHING that happens for 2000 years. People have been saying "the gods are angry! The world is coming to an end!" for 10000 years. So what? By this logic, the world has ended 1,000,000 times already. Gee, it looks like it''''s still here to me.
Posted by legacyABQ at 08:05 PM : Oct 08, 2008


Read this. 2 Peter 3:1-9

[charpayton]

As Dumbama rises in the polls, so the stock market decreases in value...coincidence? No. Americans who work for their money save and invest do not want their economy overtaken by the socialist messiah that the Dumbocrats have nominated. Trust me, when Barrack Hussein declines in the polls, the stock market will rally.

[noloyalisti]

Mission Accomplished for the anti-regulation Republicons. Now their destruction of the middle class and the fascist takeover of America can be complete.

[gramto8]

Does anyone besides me feel that Dumbya is going to use this economic disaster that has so conveniently happened just before a presidential election to declare martial law? I just do not trust that man. The executive order that he made several years back setting this up keeps popping into my mind. I feel that if Obama wins the election, Bush will declare martial law and forbid the transfer of power to a new president. Or possibly, during election day, when results start coming in and show Obama ahead, he will declare martial law and void the election. The ''Executive Order'' he wrote gives him that power. How he got the power to give himself that kind of power is something I don''t understand.

[bpai99]

"That mix of emotions had the major indexes wavering between gains and losses until Paulson in late afternoon financial markets remain severely strained."

What is that supposed to mean? Where was the cbsnews.com editor here? Especially in times like these, news organizations need to be careful that their articles are accurate. Poor writing and ignorance (or obliviousness) to the basics of composition do not inspire faith in your organization''s competence and trustworthiness.

[brianbwb-2009]

Posted by itdfactsu

You''re being bamboozled again.

"The poor made the problem" standard eco-fascist line, don''t fall for it, it is only the second act of the play.

What made the poor? Job loss, due to Reagan "trickle down" which saw the expatriation of millions of jobs, and the acceptance of the use of illegal migrant slave labor for the jobs that couldn''t move out. Many of the poor used to be homeowners, autoworkers, steelworkers, miners, farmers, even entertainers, until job loss pulled the rug out from under them.

But by far the real culprit is corporate greed, crooked schemes designed to make money using lies and cooked books, until the banks don''t trust each other, because they know they all are liars, war profiteering, embezzlement, all the lies told by politicians about "the economy is fundamentally sound" while ignoring the rapid increase in poverty.

"Default swap" betting alone created a hole estimated at twice the entire world''s GDP fr one year, estimates sit at $85 trillion in debt. No way "poor people" did that.

[zietzke-2009]

You''''re ASSUMING John Kerry would have been any better.... LOL!

ABSOLUTELY !

At least Kerry didn''t lie about starting a war premised on WMD resulting in mission accomplished ? 4000 U.S. military personnel are now DEAD (KIA)

Bush ruined our credibility around the World, Sucked over $ 850 BILLION out of the U.S. economy to finance this "War", completely destroyed the U.S. economy to finance his oil company friends and Halliburton and to top it off he advocated and insisted that the bailout was in the best interests of the United States...ALL for country club / spa treatments for his CEO friends at AIG...the list goes on and on.

I hope this answers your questions....I lost a few friends in IRAQ... so I am very angry and now I watch our country go down the tubes....A great 8 years for America !!!

[itdfactsu]

Now they say there are TENT CITIES. Well, that''''s as affordable as it gets.

If you see a tent city, call it a BARNEY FRANK AFFORDABLE HOUSING CITY.

THANKS DEMOCRATS!!!!!


Posted by txgrouch2007 at 11:05 PM : Oct 08, 2008

FYI-

Bush created the ownership society and the GOP goal was to add 5.5 million homeowners and an additonal

2 million minority and low income earners to become home owners

The biggest obstacle to home ownership as stated by Bush and the GOP was the down payment

Where do you think the con-artists got the idea to create lending programs geared towards those folks

ARMS, Zero down

110% percent funding etc


The banks prior to the Bush years didn''t allow people to buy a house unless the buyer could come up with at minimum 20 % down, proof of income, debt to income ratio etc, all verified prior to being approved

WAKE UP CLOWN

[itdfactsu]

Posted by txgrouch2007 at 11:52 PM : Oct 08, 2008

Give it up dipstick

Bush took office US National Debt

5.2 Trillion

Today

US National Debt

10.2 Trillion

Try and blame this all on the housing market to cover up the GOVT waste

The US military budget

Is a sink hole

U don''t mention the trillions wasted and missing

there

I could go on but your are so out of touch it''s impossible to explain this stuff to you

[samthetvcat]

The markets overseas seem to be mixed so far - some are doing okay.

I''m waiting for the DJIA to hit 8,000 because something about hearing experts say that''s where it''s going to go makes it feel like that''s where it''s going to go - is everybody thinking the same way?

What''ll be scary is if that prediction factored in the bad data of unemployment, decreases in spending, increases in foreclosures, declining housing prices, etc but not the effect of having a tangible number in a time of uncertainty, and then the market hits 8,000 and the data''s still coming out after that and people REALLY start to panic? :o

I don''t know . . . guess I''ll wait and see . . .

[zietzke-2009]

Per IRS Regulations.....Every U.S. adult citizen is required to file and pay over taxes they OWE to the U.S. Government.....WE THE PEOPLE...WHAT A JOKE !

This Government does not represent its people...only the rich and the people who receive bailout money who get to go to saunas and posh health clubs. Let them eat cake ! Bush''s NEW WORLD ORDER ! Its here ! Isn''t this wonderfull !

America, we blew it and we let this happen. The warning signs were everywhere over the last 8 years...and President Bush was re-elected in 2004 to boot....UNBELIEVABLE !!

Now America cries because the idiots who re-elected him finally figured out the awfull truth about this administrations REAL agenda...wah, wah, wah.....:(

Do something about it !!! On Nov 4th, Vote with your heads and not your irrational bi-polar fears.

[whitemale08]

I hope everyone understands that the bailout bill was a travesty that will end this country as we know it and thrust us into a New Dark Age.

All of these private central banks are in the process of injecting their owners with trillions of ''dollars'' while it still has some value left and then let the hyper-inflation destroy all of us on this planet.

We are so so stupid. We get so caught up in this political petty nonsense that keeps us distract while we are literaly being robbed blind by a bunch of thieves and evil bank robbers.

What a shame.

[whitemale08]

I have been a life long Democrate and Hillary supporter but I will be voting for McCain/Palin this election!


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

Posted by praiseallah1 at 09:15 PM : Oct 08, 2008--

Who gives a da** who you will vote for or who you support.

Palin is an idiot and not ready to be President.

Hillary Clinton voted for the stupid bailout bill and the Iraq War, all part of her Bildeberg assignments from 2 years ago.

And John McCain has the worse judgement from voting for the Iraq war which has bled our economy dry, to the failed ''surge'' strategy, to his pick of some nobody like Sara Palin who thinks foreigners flying over house in Alaska gives her the foreign policy experience to be President.

Give me a break.

[pollroller1]

If the interest rates get any lower the banks will be paying us to borrow money. LOL Actually I see this as an opportunely to make some money in the stock market.

[praiseallah1]

Obama is a corrupt politician just like those criminals Barney Franks and Chris Dodd who caused this economic mess! Go watch the YouTube video "House of Lies: How Congress Failed Our Economy".

watch?v=Z5z9lD4C2Io

I have been a life long Democrate and Hillary supporter but I will be voting for McCain/Palin this election!

[strangeworld]

You can thank the republican party for our economic tragedy. Since 1980, the republicans have been operating under the idea that you can somehow spend yourself into wealth. The saddest part of this whole financial situation is that once again the taxpayer will have to pay up so that the wealthy can continue to live the high life. A vote for John McCain is a vote to put a yoke around the necks of your children and grandchildren - they''ll be forced to pay greater taxes to finance the gluttony of today''s republican greedy.

[iphyt4u]

Lets all take out huge loans. If we can''t pay them back, who cares, the government will bail us out. If you get layed off, at least you''ll have that huge loan to live on.

[legacyabq]

The bible is just one religion''s book. It is not the only opinion out there. People have been saying "the bible predicted it" about EVERYTHING that happens for 2000 years.
People have been saying "the gods are angry! The world is coming to an end!" for 10000 years.
So what?
By this logic, the world has ended 1,000,000 times already. Gee, it looks like it''s still here to me.

[legacyabq]

Sevenbillion

You make an *excellent* point.
The interest is so low that its effectiveness as a tool is nearing nil. People treat the economy like a gambling casino, and we have gotten far away from realizing real values of various stocks. So much emphasis is placed on skimming fees and making money on short term trading, and speculation on futures etc. that it''''s a wonder that companies even remember to actually PRODUCE anything anymore, like GOODS and SERVICES.. Its become a giant monopoly game. This is no way to run an economy. WAAAAAY too much emphasis is put on "growth", when that growth is only on paper.
Look, the economy cannot grow infinitely. We need to stop playing like we''''re warren buffet, and base our economy on tangible goods and services, sustainable things like new energy technololgy, and stop all this day-trading currency-exchange-skimming bellshut.