What a difference a year makes.
Exactly one year after setting its all-time high, the Dow Jones industrial average plummeted today, falling 7.3 percent to 8,579, the first time it has closed below 9,000 since June 2003.
The Dow's loss of 679 points is the third-largest point loss for the index and the 11th-largest percentage loss. It was the seventh day in a row of losses on Wall Street as investor fears of the financial crisis intensified.
The Dow is now down more than 39 percent from its peak of 14,164.53 set Oct. 9, 2007.
The broader Standard & Poor's 500-stock index was down 7.6 percent, about 75 points, at 910. The Nasdaq was down 5.5 percent, 95 points, at 1,645, despite better-than-expected earning from International Business Machines, which buoyed the index earlier today.
The Dow was led down by General Motors after J.D. Power and Associates reported that the global auto industry might experience an "outright collapse" in 2009. GM is down 31 percent to $4.76 a share, levels the company has not seen for decades. The S&P put GM's debt on credit watch, a key indicator of the company's health.
Investors have become frustrated that the government's efforts to tackle the financial crisis, from a global interest rate cut to plans to buy up billions in toxic mortgage debt, have yet to loosen the credit markets, analysts said. Investors largely shrugged off coordinated global interest rate cuts yesterday as beneficial in the long term but irrelevant to the current crisis, and lenders continue to hoard cash and refuse to lend to each other.
"Everyone applauds [the government efforts]. The fearful part is that nothing has taken hold," said Bart Barnett, head of equity trading at Memphis-based Morgan Keegan. "None of it seems to stop the freefall in the market."
During an afternoon event commemorating Hispanic Heritage Month, President Bush sought to restore investors' faith in the economy. Bush said he was "confident in our economy's long-term prospects."
"We'll get through this deal," Bush said.
Oil prices also continued their more than two-month decline today, falling $1.91 to $87 a barrel. Energy shares were down on the news. Exxon Mobil and Chevron fell 9 percent.
Financial stocks continued to take a beating, helping drag down the Dow. Citigroup and Wells Fargo, which are still fighting for control of Wachovia, were down 8 percent and 16 percent respectively. Morgan Stanley continues to suffer from concerns that Mitsubishi UFJ Financial Group might abandon plans for a $9 billion investment in the firm. It is down 26 percent. Morgan Stanley has said closure of the deal is imminent.
