Tuesday, September 23, 2008

The Fall of 2008

Stocks tumbled on Monday as investors worried a $700 billion bailout for the financial sector may not resuscitate a slumping economy, while a record spike in oil prices renewed concern about consumer spending.

Banks, home builders and big manufacturers were among the biggest decliners as negotiations over the government's rescue plan to mop up bad mortgage debt on banks' balance sheets heated up in Washington.

Investors also dumped consumer-oriented companies and airlines as oil surged $16.37 to settle at $120.92 a barrel, its biggest one-day jump on record. A sharp fall in the dollar added to oil's gains.

A Wall Street analyst downgrade hit shares of JPMorgan Chase, the No 3 U.S. bank, which fell 13.3 percent, making it the top drag on both the Dow and the S&P 500. Wells Fargo dropped 11.6 percent. For details, see

The S&P financial index shed 8.5 percent, while an index of airline stocks fell 9.4 percent.

Monday's market swoon wiped out nearly all the gains seen on Friday when the bailout announcement sparked Wall Street's best one-day advance since 1987. Only 2 of the Nasdaq 100 stocks end higher.

Investors cited uncertainties about the rescue plan's details and concern about whether it would provide a lift for the U.S. economy, which many fear is already in recession.

"Here it is Monday and people are waking up from a gigantic hangover, trying to figure out what's next," said John Schloegel, vice president of investment strategies for Capital Cities Asset Management in Austin, Texas.

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