Washington - 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.
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.
USA
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