Dow plunges below 10,000 amid sell-off

Wall Street joined in a worldwide cascade of despair Monday over the financial crisis, driving the Dow Jones industrial average to its biggest loss ever during a trading day. Even a big late rally failed to keep the Dow from its first close below 10,000 since 2004.

The sell-off came despite the $700-billion federal bailout of the financial system, 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.

U.S. investors Monday appeared worried that the bailout would not be enough to jump-start the economy.

At its worst point, the Dow was down more than 800 points, a record. The stock market rallied during the final 90 minutes of the session, and the Dow finished down 369.88 points, or 3.6%, at 9,955.50.

The blue-chip average is off almost 30% from its all-time high of 14,164.53 points, set a year ago this week.

Speculation among traders during the session that the severe pullback would force the Federal Reserve to take other steps to soothe the market helped stocks rebound from their lows.

Broader indexes also plunged. The Standard & Poor’s 500 index shed 42.34 points, or 3.9%, to 1,056.89, and the Nasdaq composite index fell 84.43 points, or 4.3%, to 1,862.96.

The Russell 2,000 index of smaller companies dropped 23.49 points, or 3.8%, to 595.91.

The selling was broad: About 250 stocks finished the day higher on the New York Stock Exchange, while about 3,000 finished lower.

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, the worst weekly return since the week after trading resumed following the Sept. 11, 2001, terror attacks.

Overseas, key stock indexes tumbled 4.3% in Japan, 6% for the FTSE-100 in Britain, 7.1% in Germany and 9% in France.

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 crush of selling Monday came one week after the Dow lost 777 points, its biggest closing loss in terms of points. On that day, the House voted down an early version of the bailout package.

The swings in the Dow on Monday also marked the beginning of a fourth week of tumult in the markets.

Triple-digit Dow swings have been commonplace since mid-September, when investment house Lehman Bros. filed for bankruptcy protection and the government stepped in to bail out insurer American International Group Inc.

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%. Monday’s drop, by comparison, was less than 8% at its worst.

As an indication of how fearful investors still are, government-backed debt was in high demand. The yield on the six-month Treasury bill fell to 1.01% from 1.10% late Friday. The yield on the 10-year T-note fell to 3.46% from 3.61%.

Growing recession worries sent the price of oil tumbling. Crude futures fell $6.07 to $87.81 a barrel.