Major Stock Market Indexes Hit 12-Year Low

Dow Jones And S&P 500 Slide To 1997 Levels As Investors Grow Increasingly Pessimistic

(CBS/ AP)  Wall Street has turned the clock back to 1997.

Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since Oct. 28, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997.

All the major indexes slid more than 3 percent. The Dow is just over 100 points from 7,000.

"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.

"The decline has been broad-based and brutal," says CBS News correspondent Anthony Mason. "For example, you can buy a share of GE now for less than the cost of a lightbulb. You can buy a share of GM for less than the cost of a gallon of gas. And you can buy a share of the New York Times Company for less than the cost of a Sunday paper."

Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.

Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They're also worried that banks' losses will keep escalating as the recession sends more borrowers into default.

"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."

The Treasury and other agencies issued a statement after The Wall Street Journal reported that Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government's plans.



"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."

Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.'s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.

"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.

The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. The major indexes plunged through the lows they reached in late November, at the height of the credit crisis.

"There's no main driver of the down day," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's just so much skepticism in the overall market and (the question is) is the government doing proper things to get us out of this problem. Obviously the stock market is voting no."

According to preliminary calculations, the Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on Oct. 28, 1997 when it finished at 6,971.32. The Dow hasn't traded below the 7,000 mark since October 1997.

The Standard & Poor's 500 index fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.

Jason Weisberg, director of floor operations for Seaport Securities, told CBS Radio News that long-term investors have been effectively driven from the market.

"We need to see if we stay below these 12-year levels - whether this is an anomaly or whether we're going to continue to go lower," he said.

The technology-laden Nasdaq composite index dropped 53.51, or 3.71 percent, to 1,387.72.

The Russell 2000 index of smaller companies fell 16.38 or 3.99 percent, to 394.58.

Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares compared with heavy volume of 2.12 billion shares on Friday.

Among tech stocks, Hewlett-Packard Co. fell $1.96, or 6.3 percent, to $29.28, and Intel Corp. dove 70 cents, or 5.5 percent, to $12.08.

Other big decliners included General Electric Co., which dropped to a 14-year low of $8.80, but ended down 53 cents, or 5.7 percent, at $8.85. Aluminum producer Alcoa Inc. tumbled 48 cents, or 7.6 percent, to $5.81.

Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America Corp., which gained 12 cents, or 3.2 percent, to $3.91.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.79 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.28 percent from 0.26 percent Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.59 to settle at $38.44 per barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.95 percent, and France's CAC-40 slipped 0.82 percent. Earlier, Japan's Nikkei stock average fell 0.54 percent.

[ianbryce]

Are you being sarcastic or are you for real MobeaB? I was thinking about this too but I have never or have one clue about investing. So if you do please let me know how you go about this. Ive been going online to get some information but Im still a little confused. Fill me in if you can.

[postk49]

Obama did in 45 days what Bush tried to do in 8 years--make Bush look good.

[roystoll2]

How in the world are we ever going to get out of this Obama caused recession if all he does is bash business and spend money on every minority program in history. As Ross Perot said ten or so years ago, all the poor people in the world have never created a single job. No union has ever created a job. Only people with money and or business can create jobs. How can you stimulate an economy if you kill the very people that create the jobs? Did I miss something or can someone please explain this to me?

[roystoll2]

Please oh you Truth Seeking Liberal "Obama Intelectuals" tell me one job that the Republicans and or Bush, caused to move overseas to take advantage of lower wages or lower taxes. I keep hearing about this but I see no proof. Can somebody please enlighten me as to which law or policy or regulation that you Bush Bashers refer to?????

[roystoll2]

How low does the stock market have to go before people take what we say with seriousness? Obama and his administration are the most anti-business administration in history. They will not accept blame for anything that they have said and done and seek to blame "big Business" "Big Oil" or the "rich" for everything. IT IS A FACT THAT MOST OF THE RICH ARE DEMOCRAT-FOLLOW THE MONEY! The "Rich" pay a full 80% of the tax and make up less that 5% of the population and I don't know how to tell you this, They don't have to live here and pay high taxes. Business in this country is scared to death of Obama and his cronies and their tax policies. Business has no confidence in Obama> He and his party caused this recession by scaring everybody into thinking they would lose their jobs for the last two years of his campaign, just to get elected. If you yell "FIRE! IN A CROWDED THEATER, PEOPLE TEND TO RUN!" That my friends is exactly what happened, and then he blamed it on Bush. Kind of similar to John Gotti, "THE TEFLON DON" now we have OBAMA "THE TEFLON PRESIDENT'!

[khhammerle]

The community organizer strikes yet again. Pushing Marxism with every action, while talking about how bad things are is straight from the Marxist/Leninist handbook on how to overthrow a government.

[MobeaB]

Well, now that stock is so low, I, who am NOT in the rich catagory, can finally afford to buy some stock. I plan on using the $275 stimulus check that i will get in June and buy some stock. Yes, I realize that at first i may lose most of it, but eventually within the next five years, it WILL come back up and i will make some money on it. FINALLLY, i can afford to buy some stock! Even if it's just a few shares, it will eventually add up. The government is giving me free money and i plan on investing it. For the first time in my life. So what if i only make $5.00 on it in five years. That's more than what i would have made if i had just spent it on clothes. If I can buy 31 shares of GE @ $8.85 a share now, sometime in the next five years,I'm sure that they will develop some type of new technology that will drive the price at least double that. That means that in 5 years i will have $548.70 in stock on my intitial investement of $275 that the government gave me for free! I don't mind waiting 5 years for that kind of return on free money. As a matter of fact, i would like to say thank you for the opportunity to finally be able to invest in our economy for the first time in my life.

[ireallydoknow]

We are not in a recession. A fundamental shift is occurring. The wise will: get out of the market now and stay out; hold only cash (do not try for gain, just hold your own). The market (and, in truth, all investment tools) has not even begun its collapse.

[wl7bzh]

The only good thing about this crash is that compared to 1929 we can see this one coming.

[steeepe]

I guess the rich and intelligent who managed their money well aren''t buying Comrade Obama''s agenda of pulling all the money up into government control are they?

Posted by WiccaOne at 08:14 PM : Feb 23, 2009

And who would those people be? The ones who invested with Madoff or Stanford? Where did the rich and intelligent invest so that they haven't taken a hit? What would you do? Just step back and let everything fall apart? No government intervention? Who cares if the financial industry collapses and takes everything with it, right? Where's your money?

[steeepe]

think its time to quit blaming the last guy, pull up your boots and start fixing things. this guy doesnt know how to do that and it shows. Over and over again, the market is telling him he is wrong but he is too stubborn to listen. He is more stubborn than Bush ever was. Adn I didnt like him much either.

Posted by machineguy at 08:07 PM : Feb 23, 2009

How to fix the economy is a big guess. The experts disagree, so I certainly don't know what will positively work. But I think it's clear by now that "trickle-down" economics never worked, and there's no reason to believe it will work any better than what's already being done. The markets rise and fall on a whim, so if you base policy on them, you're screwed.

[McHineguy]

Just remember 53 percent of you voted for this community orginizer who has never, ever run anything, let along a country. He picks the worst of the worst to help him run the country and none of them have any idea of what to do. They all want to throw money, more money and the most money at it. It won''t work,ever. Now we got the handout king, and watch the stock market drop more and more. Now when you tax the rich, to share the wealth, you will see the stock market go farther. I predicted before he was sworn in the stock marker would go to 7000, it is almost there and he has yet to be in office 60 days. You ain''t seen nothing yet. God Bless George W. Bush, at least he had some brains.


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Posted by platteman at 07:33 PM : Feb 23, 2009

"Tax the rich!!! Tax the rich!!!" they cry. So the rich simply leave town and then they wonder: "Who will pay? Who will pay?' Guess what, you libs tore it down, now you are all that is here to pay. How far will it drop before you give up these hokey dreams? american wasnt built on handouts and bailouts and it wont be saved that way either.

[u-r-right]

Do you notice how each of these posts start out on topic and then turn into a Bush/Obama back and forth no matter what the news piece is about?

[McHineguy]

Thanks, George Bush, for the wonderful condition you left the country in. It must be really gratifying to contemplate how your "conservative" philosophy has worked to improve everything so much. I guess you should share the credit with the GOP, whose fabulous ideas have been so instrumental in keeping the country strong and prosperous, keeping food safe and providing rapid relief to victims of natural disasters, not to mention unparalleled funding for science, the backbone of innovation. At this rate, everybody will be a righteous neocon before long!


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Posted by steeepe at 07:58 PM : Feb 23, 2009

I think its time to quit blaming the last guy, pull up your boots and start fixing things. this guy doesnt know how to do that and it shows. Over and over again, the market is telling him he is wrong but he is too stubborn to listen. He is more stubborn than Bush ever was. Adn I didnt like him much either.

[steeepe]

Thanks, George Bush, for the wonderful condition you left the country in. It must be really gratifying to contemplate how your "conservative" philosophy has worked to improve everything so much. I guess you should share the credit with the GOP, whose fabulous ideas have been so instrumental in keeping the country strong and prosperous, keeping food safe and providing rapid relief to victims of natural disasters, not to mention unparalleled funding for science, the backbone of innovation. At this rate, everybody will be a righteous neocon before long!

[shazmigangs]

It has to be rubert murdoch behind this crash after crash since he bought the dow jones industrial exchange....Mr holder arrest rubert murdoch...

[hetup-2009]

Lets face it, the stock market system is dying, banks are never ever ever going to be trusted again. Cash is going to rule. Thank God for this, it has been too long coming.

[rudy6543]

Well, I guess you liberals/democrats democrats finally "stuck it" to those horrible rich people. Man, all of those investors really got their clock cleaned today. That ought to teach them not to make profit without sharing the wealth with people who didn''t risk anything.


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Posted by edintex at 07:25 PM

What the market is experiencing is their (your) own doing. Nobody made the CEOs commit fraud, nobody made the oil companies extort billions, nobody made your President invent a war to make his friends rich off the backs of Americans, and nobody make the financial institutions practice predatory lending practices.

[rudy6543]

Posted by platteman at 07:33 PM

And just remember you voted for a man that took the lead in the biggest disaster ever of the so-called free market which became marked by fraud, greed, and extortion.

[platteman]

Just remember 53 percent of you voted for this community orginizer who has never, ever run anything, let along a country. He picks the worst of the worst to help him run the country and none of them have any idea of what to do. They all want to throw money, more money and the most money at it. It won't work,ever. Now we got the handout king, and watch the stock market drop more and more. Now when you tax the rich, to share the wealth, you will see the stock market go farther. I predicted before he was sworn in the stock marker would go to 7000, it is almost there and he has yet to be in office 60 days. You ain't seen nothing yet. God Bless George W. Bush, at least he had some brains.