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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
The Dow Jones industrials fell under 9,000 today for the first time since June 2003 as investor confidence in financial markets appeared to collapse.
At the close, the Dow was down 679 points, or 7.3%, to 8,579 -- its second-largest one-day point loss. Only the 778-point drop on Sept. 29 was larger.
The Standard & Poor's 500 Index was off 75 points, or 7.6% to 910 -- its lowest close since April 21, 2003. The Nasdaq Composite Index was down 95 points, or 5.5%, to 1,645 -- its lowest close since July 1, 2003.
The S&P fell well below 960, a closely monitored support level that was supposed to trigger new buying.
With today's finish, the Crash of 2008 has left the Dow 39.4% below its record close of 14,164.53 and the S&P 500 down 42% from its record close of 1,565.15. Both records were set exactly one year ago today. The Nasdaq is off 42.4% from its 2007 closing high on Oct. 31.
The Dow has fallen 21% in seven trading days in October. The S&P is off 22% and the Nasdaq 21%. The declines add to October's reputation as the weakest month for stocks. The Dow fell 23% in October 1987 (mostly a 508-point decline on Oct. 19).
The brutality of today's fall shocked Wall Street. "Nobody living today has been in a market environment like this," Robert Schaeffer, a money manager at Becker Capital Management, told Bloomberg News. "People are flying blind."
"There’s no safe place to hide," Jon Najarian of OptionMonster.com told CNBC.
The stress continued overseas. Japan's Nikkei 225 Index($N225) was down 9.9% to 8,256 in early Friday trading. Stocks in Australia and Singapore were down 6%.
Futures trading tonight suggested U.S. stock indexes will open lower on Friday as well, with the Dow possibly starting at 8,379, down 200 points from today.
GM, Morgan Stanley shares sink
A key event appeared to be news that General Motors' (GM, news, msgs) debt faced a new downgrade to junk levels by Standard & Poor's and increasing concerns that it would survive in its current form.Standard & Poor's big concern was that the auto giant would run out of cash sometime next year.
The stock was at $4.76, down 31%, GM's lowest close since March 30, 1950, according to Global Financial Data, a Los Angeles research firm.
Stock Charts (Year)
General Motors
Morgan Stanley
In addition, there were reports that margin calls forced hedge funds and others to sell stocks and that investor redemptions of mutual funds were growing in volume.
And heavy selling shares in Morgan Stanley (MS, news, msgs) suggested that the venerable investment house, spun out of the old JPMorgan & Co. in 1935, might suffer the same fate as Merrill Lynch (MER, news, msgs), which agreed to sell out to Bank of America (BAC, news, msgs).
Morgan Stanley closed down 25.9% to $12.45 and has fallen 83% since June 2007.
"Morgan Stanley is now facing the pressures that broke its peers. Hopefully, this company can withstand the stress," wrote analyst Dick Bove of Ladenburg Thalmann in a note to clients today.
Friday brings two important events: earnings from General Electric (GE, news, msgs) and an auction to determine the price of about $400 billion of credit default swaps (CDSs) on mortgage bonds issued by the now-bankrupt Lehman Bros.
A credit default swap is a contract that provides insurance against a bond issuer defaulting on its debt. These contracts are the core of the credit crisis because no one knows how much the insurers are liable for.
The cause of the ongoing market crash has been a credit crisis that erupted in the summer of 2007 as turmoil slammed the U.S. housing market.
Banks have been unwilling to lend to each other except at very high rates. The spread between the three-month London interbank offered rate, LIBOR, and the three-month U.S. Treasury bill yield was 4.17 percentage points today. A month ago it was just 1.2 percentage points.
| Thurs. | Change from closing peak | Date of peak | |
|---|---|---|---|
| Dow Jones Industrial Average | 8,579.19 | -39.43% | Oct. 9, 2007 |
| S&P 500 Index | 909.92 | -41.86% | Oct. 9, 2007 |
| S&P 100 Index | 432.19 | -40.78% | Oct. 9, 2007 |
| Nasdaq Composite Index | 1,645.12 | -42.46% | Oct. 31, 2007 |
| Nasdaq-100 Index | 1,275.10 | -43.05% | Oct. 31, 2007 |
| S&P Midcap 400 Index | 548.70 | -40.18% | Oct. 9, 2007 |
| Russell 2000 Index | 499.20 | -41.67% | July 13, 2007 |
| Dow Jones Utilities Average | 344.31 | -37.71% | Dec. 10, 2007 |
| Dow Jones Transportation Average | 3,669.48 | -33.20% | June 5, 2008 |
| Nikkei 225 Index (Japan) | 9,157.49 | -47.55% | Oct. 11, 2007 |
| FTSE 100 Index (Britain) | 4,313.80 | -35.91% | Oct. 12, 2007 |
| Dax Index (Germany) | 4,887.00 | -39.23% | Oct. 12, 2007 |
The Dow loses 630 points in 150 minutes
The market had been volatile all day, but the last ugly round of selling began at around 1:30 p.m., with the Dow at 9,208.72. The average fell nearly 630 points in the next two-and-a-half hours.The 30 stocks in the Dow were all lower. The best performer was IBM (IBM, news, msgs), down 1.7% to $89. Big Blue had been up for much of the day after reporting better-than-expected earnings late Wednesday. GM was the laggard. Seven Dow stocks lost more than 10% on the day.
Stock Chart (Year)
CBOE Volatility Index - the Fear Index
The selling was so violent that the CBOE Volatility Index($VIX.X) -- a measure of investor fear -- hit nearly 65 before closing at 63.92. The higher the index, the more fear there is in the market.
The slump actually caused oil prices to fall in after-hours electronic trading. Crude was trading at $84.78 a barrel in New York at 7:30 p.m. That was after closing in regular trading at $86.59, down 2.7% on the day. Some analysts believe crude will fall under $80 soon. The Organization of Petroleum Exporting Countries is concerned enough that it has called a Nov. 18 meeting, possibly to cut production to support prices.
The sell-off came after news that Treasury Secretary Hank Paulson may use his new authorities to buy direct stakes in U.S. banks to help restore confidence in the markets. Investors, however, didn't seem convinced.
Investors want immediate gratification from the measures the Federal Reserve and Treasury have taken to stop the bleeding in the financial crisis, but several traders are urging patience, saying that it will take time for results to work their way into the financial markets and actually boost confidence.
A temporary ban on short-selling by the Securities and Exchange Commission expired at midnight.
- To see the Dow's sell-off with MSN Money's charting tool, click here.
Oil sinks; so do energy shares
While much of the focus today was on the banking system, the weakest link in the market was actually energy as crude prices fell.The Select Sector SPDR-Energy (XLE, news, msgs) exchange-traded fund was down 14.4% to $45.25.
Dow components ExxonMobil (XOM, news, msgs) and Chevron (CVX, news, msgs) were down 11.7% to $68 and 12.5% to $64, respectively. Oil and gas producers Anadarko Petroleum (APC, news, msgs) and Apache (APA, news, msgs) were down 12.6% to $30.41 and 10.8% to $71.80, respectively.
Oil service stocks had been strong for most of the day but finally fell with the rest of the market. Schlumberger (SLB, news, msgs) dropped 8.5% to $60.55. Offshore rig operator Transocean (RIG, news, msgs) fell 4.9% to $77.67.
Crude has fallen more than 42% from its peak of $147 in July. It's down 10% on the year.
The national average pump price of gasoline was $3.403 a gallon today, AAA's Daily Fuel Gauge Report showed, down 17.3% from a peak of $4.114 a gallon on July 17.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Crude oil (NYMEX) (per barrel) | $86.59 | $88.95 | -$2.36 | -13.96% | -9.78% |
Heating oil (per gallon) | $2.4186 | $2.4945 | -$0.0759 | -15.51% | -8.71% |
Natural gas (per million BTU) | $6.8250 | $6.7420 | $0.0830 | -8.24% | -8.79% |
Unleaded gasoline (per gallon) | $2.0273 | $2.0298 | -$0.0025 | -18.41% | -18.61% |
Citigroup gives up Wachovia bid
Late today, Citigroup (C, news, msgs)abandoned its fight for Wachovia (WB, news, msgs), clearing the way for Wells Fargo (WFC, news, msgs) to proceed with its $15 billion acquisition of Wachovia.The decision came after five days of negotiations in which it appeared that Wachovia would be divided between its two suitors.
The impasse reflected "dramatic differences in the parties' transaction structures and their views of the risks," Citigroup said.
While Citigroup said it would plow ahead with legal claims against Wachovia and Wells Fargo for damages.
Citigroup was down 10.2% to $12.93. Wachovia fell 28.9% to $3.60. Wells Fargo was off 14.6% to $27.25.
Government could buy stakes in banks
Paulson is reportedly going to use his new authorities vested by the passage last week of the $700 billion rescue package to buy direct stakes in U.S. banks.The move to help strengthen banks' balance sheets and boost confidence in the battered sector would follow similar steps announced by the United Kingdom on Wednesday.
Banks aren't raising enough capital to offset losses, posting $592 billion in write-downs and losses during the crisis while adding only $442.5 billion in new capital, according to data compiled by Bloomberg.
Paulson will attend the Group of Seven meeting in Washington on Friday to discuss the global mess, but the Treasury secretary didn't raise hopes that a G-7-backed bailout package would result.
The Group of Seven includes the U.S., the U.K., Japan, Germany, France, Italy and Canada.
The International Monetary Fund on Wednesday said the global economy is headed for a "major downturn," predicting global growth to decline to 3% next year from 3.9% this year.
On Wednesday, the Fed and other central banks around the world coordinated a lowering of interest rates. Earlier in the week, the Fed announced plans to buy commercial paper to help ease the credit crunch.
More from MSN Money
Big Blue backs forecast
Dow component IBM managed to beat expectations despite the global financial meltdown.Late Wednesday, Big Blue said it earned $2.8 billion in the third quarter, a 20% increase from last year. Earnings from continuing operations rose 22% to $2.05 per share. Revenue increased 5% to $25.3 billion.
Analysts were looking for earnings of $2.01 per share on revenue of $26.5 billion.
IBM also reaffirmed its full-year earnings forecast of $8.74 per share.
Fed to provide more cash to AIG
The Fed is lending American International Group (AIG, news, msgs) an additional $38 billion in exchange for investment-grade, fixed-income securities.The company has used most of the $85 billion the Fed loaned it last month in exchange for a 79.9% stake. AIG Chief Executive Officer Edward Liddy has been trying to sell AIG assets to pay off the loan.
Shares of AIG lost 25% to $2.39.
Separately, AIG announced that it was canceling an executive retreat at the swanky Ritz-Carlton Resort in Half Moon Bay, Calif. The Ritz-Carlton outing was to reward top independent insurance agents, which the company called a "standard industry practice."
The company spent $440,000 on a similar outing less than a week after it got the first government loan. Liddy said the long-planned event was for independent insurance agents and that no executives attended.
Walgreen backs out of Longs deal
Drugstore chain Walgreen (WAG, news, msgs) late Wednesday said it is withdrawing its hostile $2.8 billion offer for Longs Drug Stores (LDG, news, msgs), citing the "substantial deterioration" in the economic environment.Walgreen offered $75 per share for the drugstore on Sept. 12. In August, Longs had agreed to a $2.7 billion offer, or $71.50 per share, from rival CVS Caremark (CVS, news, msgs).
Shares of Longs fell 3.8% to $68.93. Walgreen was down 3.4% to $25.28, and CVS Caremark rose 1.8% to $30.38.
Weekly jobless claims fall
The Labor Department said initial jobless claims fell by 20,000 to 478,000 last week. Last year, initial jobless claims were 316,000."The spike in jobless claims suggests that the U.S. economy has entered a dark period, which is likely to be marked by increased joblessness," Miller, Tabak chief bond strategist Tony Crescenzi wrote in a note to clients.
But continuing jobless claims rose to 3.65 million, the highest level since June 2003. And the four-week moving average of continuing claims also hit its highest level in five years, at 3.56 million.
Andy Rosenbaum contributed to this report.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Treasurys | |||||
13-week Treasury bill | 0.580% | 0.640% | -0.060 | -35.56% | -81.53% |
5-year Treasury note yield | 2.823% | 2.706% | 0.117 | -5.46% | -18.29% |
10-year Treasury note yield | 3.834% | 3.715% | 0.119 | 0.18% | -4.98% |
30-year Treasury bond yield | 4.120% | 4.063% | 0.057 | -4.30% | -7.60% |
Currencies | |||||
U.S. Dollar Index | 81.365 | 81.045 | 0.320 | 2.53% | 6.09% |
British pound in dollars | $1.7112 | $1.7289 | -0.0178 | -4.00% | -13.98% |
Dollar in British pounds | £0.5844 | £0.5784 | 0.0060 | 4.17% | 16.25% |
Euro in dollars | $1.3617 | $1.3639 | -0.0022 | -3.43% | -6.84% |
Dollar in euros | € 0.7344 | € 0.7332 | 0.0012 | 3.55% | 7.34% |
Dollar in yen | 99.62 | 99.10 | 0.52 | -6.05% | -10.93% |
Canadian dollar in U.S. dollars | $0.871 | $0.888 | -$0.0177 | -7.44% | -12.31% |
U.S. dollar in Canadian dollars | $1.149 | $1.126 | $0.0236 | 8.03% | 14.03% |
Commodities | |||||
Gold | $886.50 | $906.50 | -$20.00 | 0.65% | 5.79% |
Copper | $2.4060 | $2.3550 | $0.05 | -16.43% | -20.88% |
Silver | $11.8750 | $11.7720 | $0.10 | -3.26% | -20.41% |
Corn | $4.3825 | $4.2750 | $0.11 | -10.10% | -3.79% |
Crude oil (NYMEX) (per barrel) | $86.59 | $88.95 | -$2.36 | -13.96% | -9.78% |
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