Credit, recession fears slam Wall Street

NEW YORK - Stocks slid for a fourth straight day on Monday, leaving the Dow below 10,000 for the first time in four years, on fears the global economy was hurtling into recession despite government efforts to contain the fast-spreading financial crisis.

The steep declines came in the first full session since the US Congress approved a US$700 billion bailout of the financial industry, as lending came to a virtual halt and investors shifted their focus to the crumbling outlook for the economy and profits.

But the market cut almost half its losses in the final hour of the session, as traders speculated the sell-off may trigger a coordinated global response to thaw credit markets. The S&P financial sector sub-index, which had earlier been down more than 8 percent, closed down 4.2 per cent.

The energy sector skidded as the price of oil dropped to an 8-month low below US$88 a barrel on expectations that a recession will further hamper global fuel demand.

Wall Street's drop was part of a breakneck global sell-off, which led to temporary trading halts in Russia, Brazil and Peru. The emergency rescue of two big European banks and a move by several European governments to guarantee bank deposits intensified fears that the credit crisis can not be contained.

The Dow Jones industrial average fell 369.88 points, or 3.58 per cent, to 9,955.50. It was the first time the Dow closed below 10,000 since October 2004.

The Standard & Poor's 500 Index skidded 42.34 points, or 3.85 per cent, to 1,056.89, while the Nasdaq Composite Index dropped 84.43 points, or 4.34 per cent, to 1,862.96.

For the year to date, the Dow is down about 25 per cent, the S&P 500 is down 28 per cent and the Nasdaq is down 29.8 per cent.

Source: Singapore Business Times - 07 Oct 2008