Dow suffers record point drop as House rejects bailout

NEW YORK - The Dow industrials plunged on Monday in the blue-chip average's biggest one-day point drop ever after US lawmakers unexpectedly rejected a US$700 billion financial bailout, spooking investors who saw it as essential to halting a global market meltdown.

The Dow lost about 778 points and posted its biggest daily percentage decline since the October 1987 stock market crash, while the benchmark S&P 500 also had its worst day in 21 years after the House sent the bailout plan to defeat by a vote of 228 to 205.

The tech-heavy Nasdaq had its worst day since April 2000 when the Internet bubble collapsed.

The failure of the bill, which would have let the Treasury buy up bad mortgage debt from struggling banks, added to serious concerns after the credit crisis claimed new victims, including Wachovia Corp and a bevy of European banks.

Fear was deep and widespread, as investors dumped stocks for the relative safety of US government bonds. The Chicago Board Options Exchange Volatility Index, Wall Street's main barometer of investor fear, jumped 39 per cent to 48.40, a nearly six-year high, and was at 46.72 at the close.

The Dow Jones industrial average sank 777.68 points, or 6.98 per cent, to 10,365.45. The Standard & Poor's 500 Index was down 106.59 points, or 8.79 per cent, at 1,106.42. The Nasdaq Composite Index was down 199.61 points, or 9.14 per cent, at 1,983.73.

Source: Singapore Business Times - 30 Sep 2008