US stocks plunge, Dow Jones index closes below 10,000
The Dow Jones Industrial Average Monday closed below 10,000 points for the first time in four years on worries about more bank failures or bail-outs in Europe and tumbling commodity prices, dpa reported.
But US stocks rebounded from even starker losses in the last hour of trading, apparently in expectation that the Federal Reserve may slash interest rates at the end of this month.
The New York tumbles were precipitated by stock plunges around the world as leaders in Europe and the United States fought to reassure investors that they were prepared to take all measures necessary to keep their economies afloat.
Europe's Dow Jones Stoxx 600 Index fell the most in 21 years and an index of emerging markets lost the most in its history. Trading was halted in Russia and Brazil.
Banks were at the centre of the US stock sell-off, led by Goldman Sachs Group Inc, Morgan Stanley Inc and Bank of America Corp, which said earnings dropped by two-thirds in a profit report just after markets closed.
Raising the stakes in an acquisition battle over Wachovia Corp on Monday, Citigroup Inc sued rival Wells Fargo & Co and its takeover target Wachovia for 60 billion dollars in damages. The government's Federal Deposit Insurance Corp was working on brokering a deal that may split Wachovia between the two.
Crude oil plunged 6.5 per cent to 87.81 dollars per barrel while copper dropped 7.3 per cent on the New York Mercantile Exchange amid fears that a global economic downturn would slow demand for commodities.
The blue-chip Dow Jones Industrial Average fell 369.88 points, or 3.58 per cent, to 9,955.50. The broad-based Standard and Poor's 500 lost 42.34 points, or 3.85 per cent, to 1,056.89, its lowest level since November 2003. The high-tech Nasdaq Composite index shed 84.43 points, or 4.34 per cent, to 1,862.96.
The Dow and S& P had both been down nearly 8 per cent earlier in the day.
Stocks only briefly rose after the Federal Reserve doubled its emergency auctions of loans to commercial banks to as much as 900 billion dollars.
The central bank also will begin paying interest on bank deposits under authority it gained from financial-rescue legislation enacted last week.
Some interbank-lending gauges indicated that credit availability eased somewhat after the 700-billion-dollar government bail-out for the US finance system became law on Friday. The three-month London interbank offered rate, or Libor, dropped to 4.29 per cent from 4.33 per cent on Friday.