With no end in sight to the instability in world markets, and amid growing fears that the global economic slowdown will impact the U.S., stocks were slaughtered.
The liquidation on Wall Street was broad and wanton, with the six-week selloff playing no favorites as some of the market's best-known names were socked for king-sized losses.
The Dow Jones Industrial Average was slammed for a 512.61-point loss, or 6.4 percent, to 7,539.07. It was the barometer's second-biggest point loss in history, exceeded only by the 554.26-point licking of Oct. 27, 1997. The Standard & Poor's 500 Index plunged 6.8 percent.
From its July 20 session high of 9,367.84 to Monday's close of 7,539.07, the Dow stumbled 1,828.77 points, or 19.5 percent. In percentage terms, the drop exceeds the Aug. 7, 1997-to-Oct. 28, 1997 plunge of 16.0 percent, which had previously been the steepest fall since the bull market began in October 1990.
A bear market is usually defined as a 20 percent fall in blue-chip averages.
Trading was heavy but below last week's frenzied pace.
The Nasdaq composite, heavily weighted with technology issues, saw its steepest point drop in history, down 140.53 points or 8.57 percent to 1499.15.
The S&P 500 Index fell 69.46 points, or 6.76 percent, to 957.68.
High-techs led the sell-off, knocking the Nasdaq to its biggest point loss in history and its fourth largest percentage decline.
The Philadelphia Semiconductor Index declined 8.3 percent. The Morgan Stanley Technology Index of blue-chip issues fell 10.8 percent, and the broader Pacific Stock Exchange Technology Index fell 8.8 percent.
The CBOE Software Index fell 9.3 percent, and the Amex Networking Index fell 10.2 percent.
The Amex Internet Index declined 13.2 percent, while the Goldman Sachs Computer Hardware Index fell 5.0 percent.
"For those that were in the market, I would say hang on," said Nancy Coutu, president of Oak Brook, Ill.-based Money Manager's Advisor. "I don't think there's any need for anyone liquidating any position."
Coutu says her firm, flushed with cash, is "like a kid in a candy store" as it searches among a treasure trove of big-cap stocks. "We're definitely getting that money in," said Coutu, "because no, we might not have seen the 100 percent final end of the downside, but certainly, our bet is better that we're going to make more money being in it now than if we wait for a month, when everything's back to status quo."
Coutu cautions that investors should be more careful with small- and mid-cap high-tech names, which she says are being driven by "aggressive portfolios" and the traders who thrive on them.
The so-called box makers, some of which had held up reasonably well during last week's carnage, tumbled hard. Hewlett-Packard (HWP) fell 3 1/2 to 48.Compaq (CPQ) fell 2 7/8 to 27 7/8; and Apple (AAPL) fell 3 to 31 3/16. Dell (DELL) surrendered 19 3/4 to 100.
Internet stocks, which lost ground on Friday, fell again Monday. Shares of America Online (AOL) fell 14 13/16 to 81 7/16. Online bookseller Amazon.com (AMZN) dropped 22 9/64 or about 21 percent, to 83 3/4; Yahoo! (YHOO) lost 14 1/16 to 69; DoubleClick (DCLK) fell 5 5/16, or 18.2 percent, to 23 7/8; Broadcast.com (BCST) lost 6 1/2 to 37 7/8. Search company Inktomi (INKT) fell 11 1/16 to 49.
Bay Networks (BAY) was one of the few advancers, rising 1 3/8 to 30. Shares of 3Com (COMS) fell 2 3/8 to 23 11/16; Ascend Communications (ASND) dropped 4 13/16 to 35 3/16; shares of Cisco Systems (CSCO) fell 12 13/16 to 81 7/8; shares of Xylan (XYLN) fell 1 1/8 to 15 1/4.
Among software makers, Netscape (NSCP) fell 5 3/8 to 18 1/8. Microsoft (MSFT) fell 9 5/16 to 95 15/16. Broderbund (BROD) fell 1 1/16 to 13 15/16; gamemaker Electronic Arts (ERTS) fell 4 15/16 to 38 1/8; BMC Software (BMCS) fell 6 13/16 to 42 5/16. Computer Associates (CA) fell 3 5/8 to 26 7/8.
Analog Devices (ADI) los3/4 to 14 1/16. Shares of Intel Corp. (INTC) fell 5 13/16 to 71 3/16. Altera (ALTR) lost 3 3/8 to 29 1/8, Vitesse Semiconductor (VTSS) 3 1/8 to 27 1/8, Linear Technology (LLTC) 7 5/8 to 47, Texas Instruments (TXN) 3 7/16 to 47 3/4.
Among chip manufacturing equipment makers, Lam Research (LRCX) fell 2 1/4 to 10 15/16, Applied Materials (AMAT) 2 1/16 to 24 9/16, KLA-Tencor (KLAC) 3 1/2 to 21 1/4, Uniphase (UNPH) 6 7/16 to 39 15/16, Novellus (NVLS) 2 1/16 to 26 5/8 and Cymer (CYMI) 2 1/2 to 10 1/4.
"This was panic selling as people tried to get out the door," said Roy Blumberg, chief investment strategist at Josephthal & Co.
Last week, the Dow slid 481.97 points, or 5.6 percent, for its stiffest weekly setback since the week ended Oct. 13, 1989, when it dove 7.8 percent. In the week of the Black Monday crash of October 1987, the index collapsed 13.2 percent.
Beneath the surface of the Dow, the broader market experienced a stiffer shellacking Monday.
Small-capitalization shares, in particular, lagged badly in continuation of a long-standing trend.
Friday's action was particularly noteworthy as it featured the first widespread liquidation of numerous leading stocks that had held up relatively well during the six-week selloff in blue-chip averages.
The stocks, with names like Dell, Yahoo!, Cisco, Inktomi, EMC, Rambus, and Microsoft, were among the first to buckle Monday.
"Monday's selling of those blue-chip, stalwart, bellwether, sacred cow stocks marks the culmination of the selloff," said Scott Bleier, chief investment strategist at Prime Charter Ltd. "This is the towel getting tossed in. They're finally coming to those big, big names," Bleier added. "That, combined with the market coming down to my downside target of Dow 8,000, suggests to me that the selloff is basically done."
Bleier noted the relative strength shown Monday by the banking group, badly dented in recent weeks amid deteriorating credit quality overseas.
"The bank stocks are acting extremely well and they are going to serve to stabilize this market," he said. "It's a very hard call to make, but I think you put your foot in the water here."
The healthcare and retail sectors, two segments immune to much of the market's carnage of late, came under undue selling pressure.
In the bond market, the 30-year Treasury advanced 22/32, to yield 5.291 percent.
By Kevin Marder and Stephanie O'Brien, CBS MarketWatch