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Dow Drops Below 9,000

October 09, 2008 06:10 PM
by Anne Szustek
A year and a day after the Dow Jones Industrial Average hit its all-time high, it fell below 9,000 for the first time in five years.
The Dow dropped 678.91 points—a loss of 7.31 percent—to close at 8,579.19, the lowest showing Wall Street has seen since 2003. Trepidation over the expiration of the Securities and Exchange Commission’s temporary ban on the short selling of some 700 stocks, concern over the credit market and sluggish consumer spending weighed down on trading.

Thursday marked the seventh consecutive day of losses on the Dow—losing at least 1,300 points since Sept. 30. On Monday the index closed at below the 10,000 mark for the first time since 2004. But the greater paradox lies in the fact that on Oct. 8, 2007—a year and a day earlier—the Dow hit its all-time high of 14, 164.53.

Wall Street players worry that the markets will continue to skid and crumble
as stocks fight to hold value. Bob Doll, the vice chairman of investment management firm BlackRock, told CNBC today, “We need to get some traction at some point in time here to get some sort of rally. We’ve been in this freefall zone, and the Fed’s going to have to get bigger, bolder and in front of things I’m afraid.”

An ever-widening credit market cast uncertainty on the viability of financial and automotive sector stocks. Morgan Stanley’s shares took a hit of nearly 26 percent today. The price-per-share of financial institution Wachovia, the object of an M&A tug of war between Citigroup and Wells Fargo, dropped more than 28 percent today. The two banks vying for Wachovia also saw slumps in share prices today.

Shares of General Motors dropped more than 31 percent in value, closing out at $4.76, their lowest value since 1950. CNBC reports that they were put on credit watch negative. Shares of Ford sustained a blow of 20 percent, closing at just above $2 per share.

The S&P 500 also slid for the seventh day in a row, dropping 7.4 percent to close at 901.01. That market has lost 38 percent of its value since the start of the year, putting it on track to post its worst annual performance since 1937.

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