Dow Falls Below 10,000; Down 800 at One Point

Investors fled stocks as they worried about the global credit crisis.

ByABC News
October 6, 2008, 3:42 PM

Oct. 6, 2008 — -- The stock market plunged today and the Dow Jones industrial average marked its lowest close in nearly four years as American and worldwide investors grew even more worried about the health of the global economy and the availability to easily borrowed cash.

The Dow settled at 9,955.50, down nearly 370 points and 3.6 percent from last week. The close capped a roller coaster day for stocks, with the Dow dropping 800 points in the mid-afternoon before rebounding by the day's end.

It was the first time that the Dow closed below 10,000 since Oct. 26, 2004. The Dow first closed above the 10,000 mark back on March 29, 1999.

The Nasdaq lost 4.3 percent today and the S&P 500 fell 3 percent. Oil closed lower at $87.81 per barrel.

Hugh Johnson, the chairman and chief investment officer of Johnson Illington Advisors in Albany, N.Y., said that optimism about the financial system bailout package approved by Congress last week wasn't enough to ease fears about the current credit crunch.

"Even though it's good news that the bailout package was passed, it will take time to begin to implement it and even if it's implemented, we don't know if it's going to work," he said. "It's one thing to provide banks the liquidity to make loans; it's another thing to get banks to make loans. It may be that policymakers are pushing on a string.

Johnson said if companies can't borrow the money they need to meet payrolls, pay bills and finance inventories, they might have to cut production and jobs.

That, in turn, could result in less consumer spending.

It "creates a vicious cycle," he said.

The Dow hit its lowest point of the day at 2:46 p.m., when it was down 800.06 points,

What a difference a year makes.

Almost a year ago, on Oct. 9, 2007, the Dow reached its all-time high closing of 14,164.53.The Dow ended today 4,209.03 points, or 29.7 percent, below that high.

It was also a grim picture overseas.

Over the weekend, governments across Europe rushed to the aid of ailing banks, and the governments of Germany, Ireland and Greece said they would insure bank deposits.

The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, and France's BNP Paribas agreed to buy a 75 percent stake in Fortis' Belgium bank after a government rescue failed.

Despite those efforts, overseas markets still saw significant declines.

Japan's Nikkei lost 4.25 percent today, Hong Kong's Hang Seng index fell 5 percent, the German DAX fell 7.1 percent, Great Britain's FTSE 100 fell 5.8 percent and France's main stock index plunged 9 percent.