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Re: Record plunge for the Dow
NEW YORK - Wall Street's worst fears came to pass Monday, when the government's financial bailout plan failed in Congress and stocks plunged precipitously '” hurtling the Dow Jones industrials down nearly 780 points in their largest one-day point drop ever. Credit markets, whose turmoil helped feed the stock market's angst, froze up further amid the growing belief that the country is headed into a spreading credit and economic crisis.
Stunned traders on the floor of the New York Stock Exchange, their faces tense and mouths agape, watched on TV screens as the House voted down the plan in mid-afternoon, and as they saw stock prices tumbling on their monitors. Activity on the floor became frenetic as the "sell" orders blew in.
The Dow told the story of the market's despair. The blue chip index, dropped by hundreds of points in a matter of moments, and by the end of the day had passed by far its previous record for a one-day drop, 684.81, set in the first trading day after the Sept. 11, 2001, terror attacks.
The selling was so intense that just 162 stocks rose on the NYSE '” and 3,073 dropped.
It takes an incredible amount of fear to set off such an intense reaction on Wall Street, and the worry now is that with the $700 billion plan fate uncertain, no one knows how the financial sector hobbled by hundreds of billions of dollars in bad mortgage bets will recover. While investors didn't believe that the plan was a panacea, and understood that it would take months for its effects to be felt, most market watchers believed it was a start toward setting the economy right after a credit crisis that began more than a year ago and that has spread overseas.
"Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group. "This isn't a market for the timid."
The plan's defeat came amid more reminders of how troubled the nation's financial system is '” before trading began came word that Wachovia Corp., one of the biggest banks to struggle due to rising mortgage losses, was being rescued in a buyout by Citigroup Inc. It followed the recent forced sale of Merrill Lynch & Co. and the failure of three other huge banking companies '” Bear Stearns Cos., Washington Mutual Inc. and Lehman Brothers Holdings Inc.; all of them were felled by bad mortgage investments.
And it raised the question: Which banks are next, and how many? The Federal Deposit Insurance Corp. has a list of over 110 banks that were in trouble in the second quarter, and that number surely has grown in the third.
Traders on the floor were aghast at the House vote.
"How could this have happened? Is there such a disconnect on Capitol Hill? This becomes a problem because Wall Street is very uncomfortable with uncertainty," said Gordon Charlop, managing director with Rosenblatt Securities. " The bailout not going through sends a signal that Congress isn't willing to do their part."
Wall Street is contending with all these issues against the backdrop of a credit market '” where bonds and loans are bought and sold '” that is barely functioning because of fears that anyone lending money will never be paid back. The evidence of the credit markets' ills could again be found Monday in the Treasury's 3-month bill; investors were stashing money there, willing to take the tiniest of returns simply to be sure that their principal would survive in what's considered the safest investment. The yield on the 3-month bill was 0.15, down from 0.87, and approaching zero, a level reached last week when fear was also running high.
Analysts said the government needs to find a way to help restore confidence in the markets.
"It's probably fair to say that we are not going to see any significant stability in the credit markets or the stock market until we see some sort of rescue package passed," said Fred Dickson, director of retail research for D.A. Davidson & Co.
On Wall Street, according to preliminary calculations, the Dow fell 777.68, or 6.98 percent, to 10,365.45. The decline also surpasses the 721.56-point intraday decline record also set during the first trading day after the terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.
Broader stock indicators also tumbled. The Standard & Poor's 500 index declined 106.85, or 8.81 percent, to 1,106.42.
The Nasdaq composite index fell 199.61, or 9.14 percent, to 1,983.73.
The Russell 2000 index of smaller companies fell 47.07, or 6.68 percent, to 657.72.
A huge drop in oil prices was another sign of the economic chaos that investors fear. Light, sweet crude fell $10.52 to settle at $96.36 on the New York Mercantile Exchange as investors feared that energy demand would continue to slide amid further economic weakness.
And gold, where investors flock when they need a relatively secure investment, rose $23.20 to $911.70 on the Nymex.
Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets.
"Things are dying and breaking apart," he said.
Lawmakers voted down a plan that was different than what the Bush administration had originally proposed. There were restrictions allowing Congress to limit how much of the money goes out the door at once. It also included caps on pay packages of top executives as well as assurances that the government also would ultimately be reimbursed by the companies for any losses. The Treasury would have been permitted to spend $250 billion to buy banks' risky assets, giving them a much-needed necessary cash infusion. There also would be another $100 billion for use at president's discretion and a final $350 billion if Congress signs off on it.
But Wall Street found further reason for worry overseas, as the fallout from U.S. economic problems kep spreading. Three European governments agreed to inject Fortis NV with a $16.4 billion bailout. Fortis, with has headquarters in Brussels, Belgium and Utrecht, Netherlands, is Belgium's largest retail bank.
The British government, meanwhile, said it is nationalizing mortgage lender Bradford & Bingley, which has a $91 billion mortgage and loan portfolio. It was the latest sign that the credit crisis has spread beyond the U.S.
The economic news in the U.S. only made matters worse. The Commerce Department said consumer spending fell in August to its lowest level in six months, while analysts expected it to edge up slightly. With consumers already uneasy and the uncertainty from the financial markets likely to spill over to the rest of the country, the outlook for spending remains bleak '” and consumers are the biggest driver of economic growth.
Re: Record plunge for the Dow
Its time for politicians(ALL of them) to stop playing games. Everyone knows this isn't the greatest plan in the world. Who cares. Just pass the fucking thing before this country goes belly up. Gonna be hard to play partisan games if the country ceases to exist.
Re: Record plunge for the Dow
This is bad news. If you're not worried, good for you.
The whole world should be worried. If we crash, there's gonna be riots(and wars) worldwide.
IF we make it out of this, you are going to see a massive change, and not for the best. Countries are gonna distance themselves from the US. Sure they love how much we consume(money for them), but our days of unlimited consumption are over and they know that. You're gonna see countries distance themselves from the dollar(dollar is the new peso), and while I am in the minority on this, I think the trade deficit is gonna go waaaaaaaaaaay down as countries start sending their goods to other regions and Asia concentrates on providing for themselves.
We are about to enter an era of forced isolationism.
We will have near zero imports as we destroyed our manufacturing base and moved it to China so we could save a nickel at Walmart. That was a huge nail in our coffin. We need to start rebuilding our manufacturing base ASAP. I know we don't have the money to do it, but things are gonna have to be cut to ensure its achievement because this country will die without it.
We have to stop buying from other countries. The days of buying american beef jerky that's made with cows from Argentina are numbered. It was stupid to begin with.
Also, illegal immigrants have to be dealt with in the next couple years, even if they have to be forced into labor camps or war threatened with Mexico. There's nothing here for them anymore, so get the fuck out. Illegal immigration is going to drop naturally in the coming years as those people realize coming here is worse than staying home, but we have to deal with the ones currently here.
The public has wanted a lot of these reforms for years but the government didn't care. Now that we have bankrupted ourselves into irrelevancy, the reforms are coming no matter who resists.
You hear about Obama wanting illegal immigrants to have health care and get Social Security benefits. Its true, but its just pipe dreams. There's no money for any of that liberal garbage and everyone knows it.
The irony is the supposed leader in the era of globalization is going to be on the outside looking in as globalization and whatever era is spawned from that passes us by.
We are fucked. Permanently.
Re: Record plunge for the Dow
Not good news. I don't see how anyone can be optimistic about their futures right now.
Looking at this as a college student, i'm beggining to wonder how i'm going to make it another 3+ years in college without working a full time job and live with my parents the whole time. What a wonderful time.
Re: Record plunge for the Dow
Not good news. I don't see how anyone can be optimistic about their futures right now.
Looking at this as a college student, i'm beggining to wonder how i'm going to make it another 3+ years in college without working a full time job and live with my parents the whole time. What a wonderful time.
Yeah, my cousin will be going to college next year. I feel really bad for her. She is a straight A student and in the top 5% in the state. She works her ass off on school work constantly, takes tons of advanced courses, does volunteer work,etc. In other words, delayed having the usual fun like most teens and looked towards her future.
Now she knows there's a really good chance she wont be able to get into the college of her choice because of the current economic climate.
Thanks Clinton and Bush for destroying the American empire!:thumbup:
- Gunslinger
- Rep: 88
Re: Record plunge for the Dow
We are about to enter an era of forced isolationism.
Those words sent chills down my spine because it is so true. This country has been full of "cattle" for years. When the lights are finally turned on to these morons they will not like what they see. A passive attitude has nearly destroyed this country, I just hope we can rebound. God help us all.
Re: Record plunge for the Dow
We have been fucked for a while. We already owe our souls to China with all the money we have borrowed from them. I want them to pass this bill but not with out major oversight from congress. If I am the only American who doesn't see giving Paulson and the next guy in his place full power then there is something wrong with all Americans. It's just more stripping us of our rights and puting a guy in hugh power position where he could do what he wants with no one to say otherwise? Fuck that. And CEOs wanting their big money packages? It's there fucking fault for lending people money who couldn't pay it back. We have lost our country soo much in the last 8 years. From the bullshit scare tatic The Patriot Act to this. But like most things us middle class HARD working Americans will pay the brunt of this crisis not the suit and ties on Wall street.
- Communist China
- Rep: 130
Re: Record plunge for the Dow
This is bad news. If you're not worried, good for you.
What's to worry about? Not like there's shit I can do about it. None of us have any power to change the country's economic slide, so fuck it. Even our votes won't solve this, so there is no choice but to go day by day.
Don't call me ignorant either, I've spent the last several months looking at colleges I'm smart enough to go to but can't afford. There's just no sense in fighting it.
- tejastech08
- Rep: 194
Re: Record plunge for the Dow
bigbri wrote:This is bad news. If you're not worried, good for you.
The whole world should be worried. If we crash, there's gonna be riots(and wars) worldwide.
IF we make it out of this, you are going to see a massive change, and not for the best. Countries are gonna distance themselves from the US. Sure they love how much we consume(money for them), but our days of unlimited consumption are over and they know that. You're gonna see countries distance themselves from the dollar(dollar is the new peso), and while I am in the minority on this, I think the trade deficit is gonna go waaaaaaaaaaay down as countries start sending their goods to other regions and Asia concentrates on providing for themselves.
We are about to enter an era of forced isolationism.
We will have near zero imports as we destroyed our manufacturing base and moved it to China so we could save a nickel at Walmart. That was a huge nail in our coffin. We need to start rebuilding our manufacturing base ASAP. I know we don't have the money to do it, but things are gonna have to be cut to ensure its achievement because this country will die without it.
We have to stop buying from other countries. The days of buying american beef jerky that's made with cows from Argentina are numbered. It was stupid to begin with.
Also, illegal immigrants have to be dealt with in the next couple years, even if they have to be forced into labor camps or war threatened with Mexico. There's nothing here for them anymore, so get the fuck out. Illegal immigration is going to drop naturally in the coming years as those people realize coming here is worse than staying home, but we have to deal with the ones currently here.
The public has wanted a lot of these reforms for years but the government didn't care. Now that we have bankrupted ourselves into irrelevancy, the reforms are coming no matter who resists.
You hear about Obama wanting illegal immigrants to have health care and get Social Security benefits. Its true, but its just pipe dreams. There's no money for any of that liberal garbage and everyone knows it.
The irony is the supposed leader in the era of globalization is going to be on the outside looking in as globalization and whatever era is spawned from that passes us by.
We are fucked. Permanently.
I agree completely James. I guess it's a good thing I didn't take my dad's advice from a while back and start dumping my paycheck into the stock market. He keeps telling me I need to start investing in my retirement (I'm 22 and just graduated college).
The prospects for this country's economy are not good right now. Only good thing for me is I'm in the oil industry. But even that bubble will burst if we fall into a Depression.
