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Oct 6, 2008

Global Rout Sinks Market; Dow below 10,000

U.S. stocks fell on Monday, with the Dow diving more than 500 points to below 10,000 for the first time in four years, as investors feared the widening fallout from the credit crisis would drag the economy into recession.

Wall Street's tumble was part of a global sell-off. But as severe as the U.S. losses were, they were still significantly less than the sharp declines across Europe and in emerging markets, such as Brazil, where trading was halted after a 15 percent drop in its benchmark index.

The financial sector was again a main catalyst for the drop, but the turmoil quickly spread to energy and others.

Among financial services stocks, Citigroup Inc tumbled over 10 percent to $16.40. The Federal Reserve is pushing Citigroup Inc and Wells Fargo & Co to compromise over their competing bids for hobbled U.S. bank Wachovia Corp that could result in them carving up its assets, people familiar with the matter said.

Citigroup said it is suing Wachovia and Wells Fargo, and it is seeking more than $60 billion in damages over Wells Fargo's competing bid for Wachovia.

Persistent strains in the credit markets added to fears about the wider economic outlook, while a spate of bank rescues in Europe increased concerns about the stability of global financial institutions.

"What we're seeing here is a complete global crisis. We're seeing a complete deleveraging and that is what's taking us down further," said Anthony Conroy, head trader for BNY ConvergEx, an affiliate of the Bank of New York, in New York.

"On the recession question, if you look at all the economic data for the past month or so, in fact we're in one. It's just a question of -- how severe?"

The Dow Jones industrial average .DJI slid 537.86 points, or 5.21 percent, to 9,787.52. The Standard & Poor's 500 Index .SPX tumbled 64.37 points, or 5.86 percent, to 1,034.86. The Nasdaq Composite Index .IXIC lost 119.47 points, or 6.13 percent, to 1,827.92.

The Dow fell below 10,000 for the first time since October 2004 and hit a session low of 9,738.30 -- down 587 points, or 5.69 percent from Friday's close.

Wells Fargo slipped 3.7 percent to $33.28 and Wachovia shares dropped almost 10 percent to $5.61. The S&P financial services companies' index .GSPF fell 5.6 percent.

Among other financial services stocks, Bank of America fell 4.6 percent to $32.90 after the bank agreed to settle claims brought by U.S. attorneys-general regarding risky loans originated by mortgage lender Countrywide Financial in a deal that could be worth more than $8.6 billion.

JPMorgan Chase slid 5.7 percent to $43.27, and helped drag on the Dow.

The market's tumble suggested that the $700 billion U.S. financial sector rescue plan passed by Congress on Friday was not bringing immediate relief to financial markets' woes.

Source : More on Reuters
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Good luck to those seeking work

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