AP Dow finishes below 10,000 for first time since '04 Monday October 6, 8:26 pm ET By Joe Bel Bruno and Tim Paradis, AP Business Writers
Despite big afternoon rally, Wall Street finishes below 10,000 for first time since 2004
NEW YORK (AP) -- Wall Street joined in a worldwide cascade of despair Monday over the financial crisis, driving the Dow Jones industrials to their biggest loss ever during a trading day. Even a big afternoon rally failed to keep the Dow from its first close below 10,000 since 2004.
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The sell-off came despite the $700 billion U.S. government bailout package, which was signed into law Friday after two weeks in which traders had appeared to count on the rescue as their only hope to avoid a market meltdown.
At its worst point, the Dow was down more than 800 points, an intraday record. The stock market rallied during the final 90 minutes of the trading day, and the Dow finished down about 370 points at 9,955.50.
The average is down almost 30 percent from its all-time high of 14,164.53, set a year ago Thursday.
Speculation among traders late in the session that the market's pullback had been severe enough to force the Federal Reserve into taking other steps to soothe the markets helped stocks rebound from their lows.
"If you can't say that we're oversold now I don't know what you say. You're at least due for a bounce if nothing else," said Bill Stone, chief investment strategist for PNC Wealth Management.
The global plunge in stocks was under way well before Wall Street ever woke up. In Japan, the Nikkei average lost more than 4 percent. And then the losses spread across Europe -- nearly 6 percent for the FTSE-100 in Britain, 7 percent for the German DAX and more than 9 percent for France's CAC-40.
In the United States, President Bush twice made unscheduled remarks on the economy, saying in Cincinnati that the economy would be "just fine" but that the bailout package needed time to work.
The troubles that started with an overheated housing market in the U.S. have infected financial markets around the world, making banks fearful of lending to other banks, let alone to businesses and consumers. That has led to worries that economies around the world might not only sputter but slide into reverse.
The crush of selling Monday came exactly one week after the Dow lost 778 points, its biggest closing loss in terms of points. On that day, the House voted down an earlier bailout package that had appeared to be a safe bet to pass.
The swings in the Dow on Monday also marked the beginning a fourth week of tumult in the markets. Triple-digit Dow swings have been commonplace since mid-September, when investment house Lehman Brothers went bankrupt and the government stepped in to bail out insurer American International Group.
But even with the bailout package firmly in place -- a plan under which the federal government will buy bad mortgage-related assets off the books of banks -- investors remain worried that banks are too fearful to lend and are cutting off air to the economy.
Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits. U.S. investors appeared worried the bailout would not be enough to jump-start the economy. Even other steps, including a Federal Reserve decision to expand a loan program to squeezed banks, didn't help much.
The sharp one-day tumbles over the last two Mondays don't come close to the drops that became black marks on the timeline of Wall Street history. Black Monday, in October 1987, and stock drops that preceded the Great Depression were more than 20 percent. Monday's drop, by comparisons, was less than 8 percent at its worst.
For the day, the Dow lost 3.6 percent. The selling was broad: Little more than 200 stocks finished the day higher on the New York Stock Exchange, while about 3,000 finished lower.
At its lowest point Monday, the Dow was down 800.06, at 9,525.32. The benchmark average dipped below 10,000 for the first time since Oct. 29, 2004, and closed there despite the afternoon rally.
The market's paper loss at the day's lows came to $1.1 trillion, as measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies' stocks. That compares with a loss of about $1.5 trillion last week; that was the worst weekly return since the week after trading resumed following the Sept. 11, 2001, terror attacks.
As an indication of how fearful investors still are, government-backed debt was in high demand. The yield on the three-month Treasury bill, which moves in the opposite direction as its price, fell to 0.49 percent from late Friday at 0.50 percent. Investors are willing to accept low returns to have their money in a secure place.
Investors also moved into longer-term Treasury bonds as they fled the stock market. The yield on the 10-year note fell to 3.45 percent from 3.60 percent late Friday.
Broader indexes also plunged. The Standard & Poor's 500 index shed 42.34, or 3.85 percent, to 1,056.89; and the Nasdaq composite index fell 84.43, or 4.34 percent, to 1,862.96. The Russell 2000 index of smaller companies dropped 23.49, or 3.79 percent, to 595.91.
Consolidated volume on the NYSE reflected the frantic pace of the day's trading: 7.81 billion shares changed hands, up from Friday's 6.52 billion.
The market "is displaying one of its worst traits with a herd mentality, and investors have an appetite for feeding on fear," said Anthony Sabino, a professor of law and business at St. John's University.
But he cautioned it was still not a nightmare scenario.
"Most certainly, this is not the Great Depression of the 1930s, but (is like) the savings and loan crisis of the 1980s -- and we bailed them out," he said. "Once people catch their breath, they'll see this is the proper analogy and this will breathe life back into banking institutions."
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I spoke on the phone Sunday with Sarah Palin, who was in Long Beach, Calif., preparing to take off on her next campaign trip. It was the first time I’d talked with her since I met her in far more relaxed circumstances in Alaska over a year ago. But even though she’s presumably now under some strain and stress, she seemed, as far as I could tell, confident and upbeat.
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Readers' Comments
"Why not have McCain/Palin just begin prefacing every talking point with: We have absolutely nothing to run on..."Chad, IA
In terms of substance, some of what she had to say was unsurprising: She doesn’t have a very high opinion of the mainstream media, and she believes an Obama administration would kill jobs by raising taxes. But she said a couple of things that were, I thought, either personally touching or politically provocative.
At one point, noting that Palin had remarked ruefully almost a week ago that her son Track had been, since his recent deployment to Iraq, in touch with his girlfriend but not his mother, I asked whether she had subsequently heard from him.
Palin told me she had. “He called the day of the debate, and it was so wonderful because it was the first call since they were deployed over there, and it was like a burden lifted even when I heard his voice.” Palin said that she told him that she had a debate that night. “And he says, ‘Yeah, I heard, Mom,’ and he says, ‘Have you been studying?’ And I said, ‘Yeah, I have,’ and he goes, ‘O.K., well I’ll be praying.’ I’m like — total role reversal here, that’s what I’ve been telling him for 19 years.”
That was Palin the hockey mom — or rather the military mom.
As for the campaign, Palin made clear — without being willing to flat out say so — that she regretted allowing herself to be overly handled and constrained after the Republican convention. She described the debate on Thursday night as “liberating,” and she emphasized how much she now looked forward to being out there, “getting to speak directly to the folks.”
Since she seemed to have enjoyed the debate, I asked her whether she’d like to take this opportunity to challenge Joe Biden to another one.
There was a pause, and I thought I heard some staff murmuring in the background (we were on speaker phones). She passed on the notion of a challenge. But she did say she was more than willing to accept an invitation to debate with Biden again, and even expressed a preference for a town hall meeting-type format.
Since their debate drew more than 70 million television viewers — some 20 million more than watched John McCain and Barack Obama the week before — I trust that various civic associations, universities and media organizations will have invitations in the mail to Biden and Palin pronto.
And, really, shouldn’t the public get the benefit of another Biden-Palin debate, or even two? If there’s difficulty finding a moderator, I’ll be glad to volunteer.
Palin also made clear that she was eager for the McCain-Palin campaign to be more aggressive in helping the American people understand “who the real Barack Obama is.” Part of who Obama is, she said, has to do with his past associations, such as with the former bomber Bill Ayers. Palin had raised the topic of Ayers Saturday on the campaign trail, and she maintained to me that Obama, who’s minimized his relationship with Ayers, “hasn’t been wholly truthful” about this.
I pointed out that Obama surely had a closer connection to the Rev. Jeremiah Wright than to Ayers — and so, I asked, if Ayers is a legitimate issue, what about Reverend Wright?
She didn’t hesitate: “To tell you the truth, Bill, I don’t know why that association isn’t discussed more, because those were appalling things that that pastor had said about our great country, and to have sat in the pews for 20 years and listened to that — with, I don’t know, a sense of condoning it, I guess, because he didn’t get up and leave — to me, that does say something about character. But, you know, I guess that would be a John McCain call on whether he wants to bring that up.”
I guess so. And I guess we’ll soon know McCain’s call on whether he wants to bring Wright up — perhaps at his debate with Obama Tuesday night.
I asked at the end of our conversation whether Palin, fresh off her own debate, had any advice for McCain. “I’m going to tell him the same thing he told me. I talked to him just a few minutes before I walked out there on stage. And he just said: ‘Have fun. Be yourself, and have fun.’ And Senator McCain can do the same.” She paused, and I was about to thank her for the interview, but she had one more thing to say. “Only maybe I’d add just a couple more words, and that would be: ‘Take the gloves off.’ ”
And maybe I’d add, Hockey Mom knows best.
More Articles in Opinion » A version of this article appeared in print on October 6, 2008, on page A29 of the New York edition.
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Search: All News Yahoo! News Only News Photos Video/Audio Advanced Palin Takes `Gloves Off' Against Obama, Fills Attack-Dog Role
Nicholas Johnston Mon Oct 6, 12:01 AM ET
Oct. 6 (Bloomberg) -- Republican Sarah Palin returned to the campaign trail with her ``gloves off,'' taking on the vice presidential candidate's traditional role of attack dog and lashing out at Barack Obama.
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At weekend rallies and fundraisers she criticized Illinois Senator Obama personally, particularly his association with Bill Ayers, a former member of the Weather Underground radical group, whom she described as a ``domestic terrorist.'' The Democratic presidential nominee ``is not a man who sees America as you see it,'' she said at a campaign rally in Carson, California.
Her supporters said they liked the new tone. ``It's about time the pit bull got loose,'' said Ken Gow, a 47-year-old police officer who was among the more than 10,000 people at the Oct. 4 rally.
The new attack mode may be a political necessity for a ticket that has fallen behind with voters. McCain trails in national polls by Gallup and Rasmussen by numbers that are outside the margin of error. Obama has also opened an advantage in important battleground states such as Ohio, where he has a 7- point advantage, according to a recent poll by the Columbus Dispatch conducted Sept. 25-Oct. 3.
`More Aggressively'
Palin alluded to the need for a more combative posture. ``There does come a time when you have to take the gloves off and that time is right now,'' Palin said at fundraiser in Costa Mesa, California. She told donors to ``get ready'' for the campaign to ``tell Americans more and more aggressively'' about the choices in the election.
Alaska Governor Palin is on the offensive after several days off the trail as she prepared for last week's debate against the Democratic vice-presidential candidate, Senator Joe Biden of Delaware, and a series of television interviews that she herself has said were ``not too successful.''
In the interviews, with Katie Couric of CBS News, Palin, 44, had trouble naming Supreme Court decisions she opposed aside from Roe v. Wade, the 1973 decision which legalized abortion nationwide, and couldn't name any newspaper or magazine she relies on to stay informed.
Ironically, Palin's charges about Obama's link to Ayers -- whose group carried out bombings of government buildings in the early 1970s -- was based on an article this weekend in the New York Times, a paper the campaign of Republican presidential candidate John McCain has said shows a ``willful disregard for the truth.''
`Palling Around'
At a fundraiser in Englewood, Colorado, Palin called Ayers ``one of Barack's earliest supporters,'' and said Obama ``sees America as being so imperfect that he's palling around with terrorists who would target their own country.''
Obama, 47, once served on the board of a Chicago charity with Ayers and has denounced the bombings. The Times' report said ``the two men do not appear to have been close'' and that there is ``little public evidence'' of relationship since 2002.
Obama spokesman Hari Sevugan said Palin's comments ``while offensive, are not surprising.'' The McCain campaign, he said, has gone on the attack ``in hopes of deflecting attention from the nation's economic ills.''
Palin's post-debate schedule will include both solo appearances and events with McCain, campaign manager Rick Davis said in an interview. She will focus on ``targeted states'' in the Midwest and Southwest, where ``she will really concentrate on galvanizing the party,'' Davis said.
Fundraising
Even though, unlike Obama, they have chosen to accept $84.1 million in taxpayer financing for the campaign, Palin and McCain have been raising millions for state parties and the Republican National Committee.
Palin held five fundraisers in the three days following the Oct. 2 debate, taking in money in California, Texas and Colorado. The campaign declined to say how much she raised, though Paul Folino, an organizer of an event in Costa Mesa, California, said the campaign brought in $2 million from about 1,200 people there.
Yesterday, she wrapped up a weekend of campaigning with a fundraiser outside San Francisco and a rally in Omaha, Nebraska, where McCain's lead over Obama is in double-digits.
At the rally in Carson, supporters cheered the new attack lines and shouted down pro-Obama protesters in the crowd. As one Obama supporter was led out of the stadium, Palin mentioned her 19-year-old son Track, who is serving in the Army.
Son in Iraq
``My son is over in Iraq right now fighting for the freedoms that that person is exercising,'' she said as the crowd roared.
``I hope she hits him even harder,'' said Scott Taylor, 51, a building inspector from Glendora. ``The harder the better.''
While the McCain campaign is calling Palin's performance in the debate a success that proves her ability to be an effective running mate, polls taken by news organizations such as CNN immediately after suggested more viewers regarded Biden as the winner. Palin continues to inspire satire on late-night television.
Impersonating the Republican candidate in a skit on Saturday Night Live this weekend, comedian Tina Fey lampooned her responses to a question about how a McCain administration would handle the financial crisis gripping the U.S.
``We're gonna take every aspect of this crisis and look at it, and then we're gonna ask ourselves what would a maverick do in this situation and then you know we'll do that,'' Fey, as Palin, said.
To contact the reporter on this story: Nicholas Johnston in Carson, California, at njohnston3@bloomberg.net
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