Dow Falls Off A Cliff

679-Point Stock Swoon Pushes Blue Chip Index Below 9,000 Mark For First Time Since 2003

(CBS/AP)  A runaway train of a sell-off turned the anniversary of the U.S. stock market peak into one of the darkest days in Wall Street history Thursday, driving the Dow Jones industrials down a breathtaking 679 points and deepening a financial crisis that has defied all efforts to stop it.

Stocks lost more than 7 percent, $872 billion of investments evaporated, and the Dow fell to 8,579. When the average crashed through the 9,000 level for the first time in five years in the final hour of trading, sellers had only begun to hit the gas pedal.

As bad as the day was, even worse was the cumulative effect of a historic run of declines: The Dow suffered a triple-digit loss for the sixth day in a row, a first, and the average dropped for the seventh day in a row, a losing streak not seen since 2002.

"Right now the market is just panicked," said David Wyss, chief economist at Standard & Poor's in New York. "Nobody wants to take on any risk. Everybody just wants to get their money and put it under the mattress."

It all took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 percent of its value.

Paper losses for the year add up to an staggering $8.3 trillion, according to figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in America.

It was the second straight day that Wall Street was rocked by a final-hour sell-off, but this one was particularly shocking.

Most of the day was relatively calm, and the trading floor was quieter than usual because of the Jewish holiday of Yom Kippur. Wall Street awoke to news the federal government was brandishing a new weapon against the financial crisis - considering seeking an equity stake in major U.S. banks in order to stabilize them.

But that step appeared to be as ineffectual as the others Washington has rolled out in recent weeks, including a $700 billion bailout of the financial industry, a coordinated interest rate cut by central banks around the world and direct lending by the Federal Reserve to private companies to provide them with short-term cash.

Acquiring a stake in the banks would be yet another startling intervention by the government in the free market, but economists said President George W. Bush was left with little choice because of the credit markets, where tight lending has choked off the everyday cash that is the lifeblood of the economy.

"In normal times, this would be out of the question, but in the present dire situation, I think the government should be employing all the powers that it can," said Sung Won Sohn, an economics professor at California State University, Channel Islands.

After the closing bell, shellshocked traders and bankers gathered at Bobby Van's Steakhouse and downed beers and drinks to chase the ghastly numbers. One Wall Streeter joked things had gotten so bad that he should apply for a job as a waiter.

"It was an ugly day, there's no ways to put it," said another customer, Alan Valdes, director of floor operations for Hallard, Lyons. "Guys were frustrated, just fed up. ... We're in an area no one has been in since 1930."

Wall Street has been teetering on the brink of panic for a month now, vulnerable to any bad news. Thursday's sell-off was triggered when a major credit rating agency put General Motors Corp. and its finance affiliate under review to determine whether it should be downgraded.

General Motors stock fell below $5 a share today - a level not seen since the 1950s, reports CBS News business correspondent Anthony Mason. Just last month, GM produced a video to reassure investors.

For the Dow, it has been nothing short of a free fall:

The average is down 2,338 points, or 21 percent, in the last four weeks, since the Lehman Brothers bankruptcy escalated a long-running credit crunch into a full-fledged crisis.

The point decline Thursday was the third-worst in Dow history. The worst, 778 points, came less than two weeks ago.

Of the last 19 trading days, there have been 11 triple-digit losses - including the unprecedented six straight. The six gains have all been triple-digits, and only one of them was enough to make up the losses of the day before.

The Dow now stands only about 1,300 points above its lowest close of the bear market that followed 9/11. In a market as volatile as this, that gap can be closed in a couple of trading days, or less.

In fact, triple-digit declines can happen almost in an instant.

On Thursday, the Dow was above 9,200 after 1:30 p.m. and still above 9,000 after 3 p.m. The pressure to sell was so intense that the Dow kept dropping precipitously for 10 minutes after the 4 p.m. closing bell as the day's losses were tabulated.

In percentage terms, the drop in the Dow exceeded the day the markets reopened after the Sept. 11, 2001, terrorist attacks. It was not close to the 22.6-percent decline on Black Monday in 1987, the last stock market crash.

Still, it is becoming increasingly clear that Washington has ever fewer places to reach in its toolbox to stop, or perhaps even slow, the crisis. Among the options still left are buying up foreclosed properties and making direct loans to homeowners, both of them hard for free-market supporters to swallow.

"There is a lot of uncertainty as to exactly how long this situation persists and what exactly will get us out of this in terms of the financial markets and, therefore, their effect on the economy," Dean Mackey of Barclay's Capital told CBS News.

Speaking in the afternoon before the market closed, President Bush told an audience on the South Lawn of the White House that the economy was going through a "very tough stretch." But, he said: "I'm confident in our economy's long-term prospects."

After the market closed, the White House said Americans should remain confident despite the market plunge, and Bush planned to speak from the Rose Garden on Friday morning - though he was not expected to unveil any new policy proposals.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked Bush on Thursday to call an emergency meeting of the G-8 industrial nations' heads of state to address the continuing global credit freeze and instability in world markets. The G-8 comprises France, Germany, Italy, Britain, Japan, the United States, Canada and Russia.

In the markets Thursday, the broader stock indicators registered similar declines to the Dow's. The Standard & Poor's 500 index fell 7.6 percent to the 909 level, and the Nasdaq composite index fell 5.5 percent to 1,645.

Meanwhile, the credit markets remained stubbornly locked-up. The benchmark rate that banks charge each other for loans, known as Libor, rose to 4.75 percent from 4.52 percent a day earlier, signaling banks are still afraid to make loans because they worry they won't be paid back.

"The story is getting to be like that movie Groundhog Day," said Arthur Hogan, chief market analyst at Jefferies & Co. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."

Adding to Wall Street's nervousness, a ban on short selling - a process in which investors borrow shares of stock and essentially bet the value will fall - expired.

With three and a half weeks before voters elect Bush's successor, there was also no immediate comment on the Wall Street action from the presidential candidates, Democratic Sen. Barack Obama and Republican Sen. John McCain.

Earlier in the day in Dayton, Ohio, Obama took aim at McCain's plan to have the government absorb the full cost of renegotiating mortgages for borrowers under strain from the dramatic decline of the values of their homes.

McCain rolled out the idea at the second presidential debate earlier this week, a forum in which he also told voters it was important to have a steady hand in the White House during a time of economic crisis.

[T2_Squared]

Now, be sure to trot out a bunch of "experts" to tell you, as an individual investor, "Don''t Paninc! Stay in the market."

Meanwhile, look at those experts all panic now.

[easeup-2009]

Fellas, Bush and his buddies know what they''''ve done, because this has been the plan they''''ve had all along since that fateful day they created on Sept 11, 2001. This is what they wanted. And now they have the control they need to take it all over and do away with the rest. Trust me, this is exactly how it was supposed to go down. And it did. If you''''re smart, you''''ll pack your family now and leave this country before it goes under that last wave.

Posted by xentpro at 12:50 AM : Oct 10, 2008

Don''t let the door hit you on the way out, moonbat.

[aztecdakota]

I wasn''t going to say anything but, the remarks about Obama will raise taxes, DUHHHHHH! BUSH just raised your taxes by almost a TRILLION dollars!!!! He did it right before your very eyes! And they said Al Capone was a crook, yea right. Am I the only one who sees this?





























Am I the only one who sees this???

[thcarson-2009]

see what your are saying. Our country''''s finacial collapse is another 911 brought on by the biggest terrorist of all....your president

how many desperate pathetic idiots in denial are there still out there like you?



If you think this is Bush''s fault alone I suggest you take a look at factcheck.org and look at it''s explaination of who''s to blame. To blame Bush alone is totally ignorant and naive.
--------------------------------------------------------------------------------

Posted by ainttaken at

[edward1975-2009]

spaceatoms: We will survive as we always have. We will pick ourselves up, where ever this ends, and go from there. This is not the first time we have faced hard times in our history and won''t be the last. But let''s hope the lesson is learned and we take steps to never let this happen again.

[brianbwb-2009]

%u201CBarring a terrorist attack,%u201D said Maslin, %u201Cin the face of what%u2019s happened to the United States economy, the world economy, in the last two weeks how does this trend reverse itself?%u201D

So since the "n-word scare" isn''t working, and that was the tactic of next to last resort, expect the "terrorist attack" any day now...

[staplesla]

Things will only get worse. We still have the auto/airline issues. People aren''t going to buy cars for quite some time, and airlines will report dismal holiday travels. Plus the upcoming holiday retail sales is going to be the worst in 20 years according to some.

[edward1975-2009]

spaceatoms: This was all driven by greed and deception. And why the Feds pushed a bailout is beyond me. They knew it would not work. They stuck the people with a $700 billion tab and asked us to like it. It would have been better spent, sending each taxpayer a cut of the money, to pay real debt off, thus putting money back in to the economy. But that would have made sense, and when Washington is involved, that goes out the window.

[inventagod2]

Four More Years!

[edward1975-2009]

GetRealTex: Get real, Congress controls the purse strings, look no further than the Democratically controlled Congress for a lot of this mess. They have been nothing but a rubber stamp for Bush, despite their constant whining, they haven''t a spine. If we are to cause a change. Then start with the ones who control the purse strings and pass law, and that would be Congress. Congress is the key, or are to blinded by stupidity to see it.

[getreeltex]

In just 8 short years, Bush and his neocon buddies have accomplished what no terrorist ever could.

They''ve bankrupted the country and brought the economy to it''s knees.

Stay the course with McSame?

Thanks but no thanks!

[dcitizen-2009]

Bush & Paulson don''t get it; Bernake & the Fed don''t get it; Congress has its collective head up ...you know what. Trickle-Down economics is a Reagan era myth.Until the Masters of the Universe and screw their heads on straight and understand bottom-up, Bubble-Up, economics, things will only get worse. The first thing that needs to be done is to establish, by law, a nationwide cap on all retail interest, including fees, at 12%; credit cards, pay-day loans, every form of interest or fees charged for a loan. This would be a start to putting the U.S. financial house in order. http://socrates911.blogspot.com

[t_barr]

FACTBOX - Lehman CDS settlement Auction Timeline
www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN0841811720081008

''The value of credit default swaps backed by defaulted Lehman Brothers bonds will be set on Friday, with protection sellers expected to face massive losses of around 90% of the insurance they sold.

Bondholders have seen their investments virtually wiped out by Lehman''s bankruptcy filing on Sept 15, with most of the defaulted bonds which will be used to settle the swaps trading in the area of 12-to-13 cents on the dollar, according to MarketAxess.

The auction to settle credit default swaps on this debt will likely be the second largest settlement of the contracts in the $55 Trillion market, following an auction to settle swaps on Fannie/Freddie on Monday.

22 dealers will participate in the auctions, which will determine how much protection sellers will recover after paying out the insurance. The timeline for the auctions follows, according to JP Morgan... 2 pm - The final price of the auction will be published.''

Come 1401 EDT, a few CDS Insurers will most likely declare Bankruptcy.

Sell-off Tsunami
Japanese stocks plunge more than 11% in early Trading
www.marketwatch.com

Asian Stocks Plunge as Credit Crisis Widens; Nikkei Tumbles
www.bloomberg.com/apps/news?pid=20601087&sid=a0.6TPDSO4sM&refer=home

Bush to make statement Fri after market volatility
www.reuters.com/article/bondsNews/idUSN0925109220081009

[standlee5]

Support your local small businesses, they''ll need all of our support during these times.

[itdfactsu]

Posted by legacyABQ at 10:47 PM : Oct 09, 2008


I agree when it comes to helping those in need at during these difficult times

But the Internet is full of right wing flamers just like talk radio etc

And they have to be dealt with

However when an American is hurting or in need I don''t ask them for their political ID in order to decide if I can or will help

[legacyabq]

: )

[samthetvcat]

---"Well, understanding and empathy will hopefully do us all some good.. We have a rough road ahead, and all us americans are going to have to face it together..Remember people, left or right, we are fellow citizens, who will sink or swim TOGETHER!
:) Good night, and good luck!"---
Posted by legacyABQ

mcvet''s a good man, and very passionate about his politics! Yes we do always prevail, and I share in your optimism - well said!

Have a nice evening :)

[mrmike1001]

The reason the markets are falling is because everybody wants to get out before Obama because president and raises the taxes. Funny how none of the talking heads wants to talk about it but the ones selling stocks are scared Obama will screw everything up so they are getting out now, if McCain rises in the polls the markets will go up.

[legacyabq]

Well, understanding and empathy will hopefully do us all some good.. We have a rough road ahead, and all us americans are going to have to face it together..
Remember people, left or right, we are fellow citizens, who will sink or swim TOGETHER!
:) Good night, and good luck!

[mrmike1001]

The reason the markets are falling is because everybody wants to get out before Obama because president and raises the taxes. Funny how none of the talking heads wants to talk about it but the ones selling stocks are scared Obama will screw everything up so they are getting out now, if McCain rises in the polls the markets will go up.