Wall Street sinks for fifth day as credit worries mount

NEW YORK - Stocks tumbled for a fifth straight session on Tuesday, capping the Dow's biggest five-day point loss ever, as fears mounted that the spiraling credit crisis would drag the economy into a deep recession.

Federal Reserve Chairman Ben Bernanke did little to reassure markets when he cautioned that downside risks to economic growth have worsened, though he did signal a readiness to lower interest rates. An earlier move by the Federal Reserve to unclog the commercial paper market, which companies use to fund their day-to-day operations, gave the stock market only a fleeting boost.

The financial sector was the biggest drag on the market, with the S&P financial sub-index dropping to its lowest level in more than a decade.

Bank of America skidded 26.2 per cent the day after it said it would cut its dividend and raise US$10 billion to help staunch rising loan losses.

The Dow Jones industrial average fell 508.39 points, or 5.11 per cent, to 9,447.11. The blue-chip Dow average has lost more than 1,400 points over the past five sessions, or nearly 13 per cent of its value, according to Reuters data.

The Standard & Poor's 500 Index dropped 60.66 points, or 5.74 per cent, to 996.23 - the first time the benchmark index has closed below the 1,000 level in more than five years. The drop was the S&P 500's biggest five-day percentage decline since the 1987 crash.

The Nasdaq Composite Index slid 108.08 points, or 5.80 per cent, to 1,754.88.

The losses came a day after a steep global equity market sell-off and traders said there was some disappointment that central banks had not orchestrated a coordinated interest-rate cut to calm financial markets.

Source: Singapore Business Times - 08 Oct 2008