Wall Street tumbles amid global sell-off, oil below $90

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(Agencies)
Updated: 2008-10-07 00:00

NEW YORK - Wall Street tumbled Monday, joining a selloff around the world as fears grew that the financial crisis will cascade through economies globally despite bailout efforts by the US and other governments. The Dow Jones industrials skidded more than 400 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.

A trader works on the floor of the New York Stock Exchange October 6, 2008. US stocks slid at the open on Monday as widening fallout from the credit crisis fueled concerns about the economy and the profit outlook. [Agencies]

The markets have come to the sobering realization that the Bush administration's $700 billion rescue plan won't work quickly to unfreeze the credit markets, and that many banks are still having difficulty gaining access to cash. That's caused investors to exit stocks and move money into the relative safety of government debt.

Over the weekend, governments across Europe rushed to prop up failing banks. The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed.

The governments of Germany, Ireland and Greece also said they would guarantee bank deposits.

The Federal Reserve also took fresh steps to help ease seized-up credit markets. The central bank said Monday it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks.

Investors took a bleak view of the future, seeing no end to the crisis in the near term. But analysts were more optimistic.

"These programs are going to be effective I believe," said Rob Lutts, chief investment officer at Cabot Money Management. "Shorter term we're in a very challenging environment that's going to take a while."

In midmorning trading, the Dow Jones industrial average fell 403.65, or 3.91 percent, to 9,921.73, dropping below 10,000 for the first time since Oct. 29, 2004. At one point, the Dow was down more than 400.

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