'Dow Falls Below 10,000 on Credit Fears in EuropeMonday 06 October 2008
by: Michael M. Grynbaum, The New York Times
Wall Street Trader wears a "Dow 10,000" hat given out when the Dow eclipsed 10,000 for the first time in the spring of 1999. The Dow dropped below 10,000 today. (Photo: Richard Drew / AP)
The selling on Wall Street began at the opening bell on Monday and only intensified as the morning went on. Shares moved sharply lower as the banking crisis tightened its grip on the global economy.
The Dow Jones industrial average fell below 10,000 for the first time since 2004 after losing more than 500 points in the first hour. The index has lost more than 1,100 points - or about 10 percent - in slightly more than a week.
Shortly after noon, the Dow was down 450 points or 4.3 percent.
The broader American stock market was down more than 4.9 percent, as measured by the Standard & Poor's 500-stock index, its worst decline since last Monday's 8.8 percent drop. At the same time, oil dropped below $90 a barrel.
The precipitous declines, which accelerated as the morning wore on, came a day after European governments were forced to scramble to save several major banks and lenders from collapse. The moves reinforced the global reach of the current crisis and alarmed depositors and regulators in the United States and abroad.
European stocks fell even further, with the major indexes in London, Paris, and Frankfurt down nearly 7 percent.
The sharp slides came despite a morning announcement from the Federal Reserve that it would significantly expand the amount of money it made available to major banks. The Fed will now lend up to $900 billion in credit, an enormous sum that officials hope will reassure banks that the government will provide them with adequate capital.
The moves were aimed at resolving a problem at the center of the current credit crisis: the reluctance of banks to lend. The healthy functioning of the world's economy is dependent on the easy flow of short-term loans among banks, businesses and consumers, a stream that has been cut off as banks become more fearful of giving out cash.
Borrowing rates remained very high on Monday despite the passage of the American bailout plan, although proponents of that package argue that its longer-term benefits will take time to carry out. Still, some gauges of anxiety in the market again reached record highs as the week began, and a benchmark overnight borrowing rate, the Libor rate, moved higher. A measure of volatility, the VIX index, jumped to its highest intraday level ever.'
The selling on Wall Street began at the opening bell on Monday and only intensified as the morning went on. Shares moved sharply lower as the banking crisis tightened its grip on the global economy.
The Dow Jones industrial average fell below 10,000 for the first time since 2004 after losing more than 500 points in the first hour. The index has lost more than 1,100 points - or about 10 percent - in slightly more than a week.
Shortly after noon, the Dow was down 450 points or 4.3 percent.
The broader American stock market was down more than 4.9 percent, as measured by the Standard & Poor's 500-stock index, its worst decline since last Monday's 8.8 percent drop. At the same time, oil dropped below $90 a barrel.
The precipitous declines, which accelerated as the morning wore on, came a day after European governments were forced to scramble to save several major banks and lenders from collapse. The moves reinforced the global reach of the current crisis and alarmed depositors and regulators in the United States and abroad.
European stocks fell even further, with the major indexes in London, Paris, and Frankfurt down nearly 7 percent.
The sharp slides came despite a morning announcement from the Federal Reserve that it would significantly expand the amount of money it made available to major banks. The Fed will now lend up to $900 billion in credit, an enormous sum that officials hope will reassure banks that the government will provide them with adequate capital.
The moves were aimed at resolving a problem at the center of the current credit crisis: the reluctance of banks to lend. The healthy functioning of the world's economy is dependent on the easy flow of short-term loans among banks, businesses and consumers, a stream that has been cut off as banks become more fearful of giving out cash.
Borrowing rates remained very high on Monday despite the passage of the American bailout plan, although proponents of that package argue that its longer-term benefits will take time to carry out. Still, some gauges of anxiety in the market again reached record highs as the week began, and a benchmark overnight borrowing rate, the Libor rate, moved higher. A measure of volatility, the VIX index, jumped to its highest intraday level ever.'
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