Dow Plunges 800 Points As Global Crisis Persists
NEW YORK (MarketWatch) -- The Dow Jones Industrial Average dropped as much as 800 points, plunging below the 10,000 mark for the first time in nearly four years, as uncertainty amid a wave of government interventions in the U.S. and Europe only seemed to add to investor anxiety.
Shares in Europe suffered their worst one-day drop on record, and the Dow was down more than 700 points at last check. Crude oil prices fell 5.5% to below $90 a barrel, and gold and bond prices leaped as investors sought a safe haven.
"Right now, it's about stabilizing the financial system and then see how much collateral damage has been done to the economy," said Owen Fitzpatrick, head of U.S. equity at Deutsche Bank.
"The clear message is that the global economy is slowing rapidly, and the magnitude of the slowdown is starting to be realized by the market."
At last check, the Dow Jones Industrial Average was down 795 points, or 7.6%, at 9,532, a session low.
The day's action marked the first time the blue-chip index has traded below the 10,000 mark since Oct. 29, 2004.
"Psychologically, it does play a role," Fitzpatrick said of that threshold. "But investors are not concentrating on this ... The big worry of the moment remains liquidity and the economy."
Among blue-chip financial shares, Citigroup Inc. fell 11%, Bank of America dropped 8% and J.P. Morgan Chase lost 8%.
Amid concern that financial pain is spreading to industries linked to global growth, energy shares, along with those of materials stocks, also fell sharply.
Among blue-chip issues, shares of aluminum giant Alcoa Inc. , which is expected to post quarterly results Tuesday, fell 12%. Equipment-maker Caterpillar Inc. stock fell 8%.
"We've had the passage of [the $700 billion] bailout but it will takes time for it to start getting traction," Fitzpatrick said.
The Treasury is not expected to start buying ailing assets
The S&P 500 fell 84 points, or 7%, to 1,015 and the Nasdaq Composite lost 159 points, or 7.6%, to 1,789, led by a 10% decline in shares of eBay , which announced it was slashing 10% of its workforce.
Trading volumes showed 1.1 billion shares exchanging hands on the New York Stock Exchange, and 945 million shares trading on the Nasdaq. Declining issues topped gainers by 5 to 1 on the NYSE and by 14 to 1 on Nasdaq.
President Bush signed a emergency legislation into law Friday just as the latest U.S. employment report showed 159,000 jobs lost in September.
"These really are unforgiving times and it was a case of buy the rumor, sell the fact as the S&P 500 moved from being up more than 3% as the last few necessary 'yes' TARP bill votes were being registered, to a near four-year low at the close," said Jim Reid, a strategist at Deutsche Bank.
Last week, the Dow lost 7.4%, the S&P 500 fell 9.4%, and the Nasdaq lost 10.8%.
Dallas Fed President Richard Fisher and Chicago Fed President Charles Evans both are due to speak on the U.S. economy on Monday. Federal Reserve Chairman Ben Bernanke is due to speak on Tuesday.
Outside of banks, Eli Lilly reached a deal to buy ImClone Systems for $6.5 billion, or $70 a share in cash.
Coca-Cola was downgraded to hold by Deutsche Bank on the potential for slower volumes at home and abroad as well as currency headwinds.
Roche, Genentech and Osi Pharmaceuticals said a Phase III trial of Avastin with Tarceva in non-small-cell lung cancer didn't improve survival.
By Nick Godt