U.S. Stocks Tumble, Sending Dow Below 9,000; GM, Insurers Slide

Lynn Thomasson and Jeff Kearns
Bloomberg News
Thursday, October 9, 2008

Oct. 9 (Bloomberg) — U.S. stocks slid and the Dow Jones Industrial Average fell below 9,000 for the first time since 2003 as higher borrowing costs and slower consumer spending spurred concern carmakers, insurers and energy companies will be the next victims of the credit crisis.

General Motors Corp. tumbled 31 percent to a 58-year low and Ford Motor Co. slumped 22 percent as the outlook for car sales worsened. XL Capital Ltd. lost 54 percent and led a gauge of insurers to a 13-year low on concern investment losses will curb results. Exxon Mobil Corp.’s biggest drop in 21 years accelerated the Dow’s decline in the final hour of trading as oil retreated below $85 a barrel. Morgan Stanley plunged 26 percent as short sellers returned to the market after a three- week ban.

“People have lost faith in everything,” said Philip Orlando, who helps manage $350 billion as chief equity market strategist at Federated Investors Inc. in New York. “We’re dealing with an investment community of atheists right now. Valuations no longer matter.”

The Standard & Poor’s 500 Index retreated for a seventh day, losing 75.02 points, or 7.6 percent, to 909.92 to cap its longest streak of daily declines since 1996. The Dow Jones Industrial Average declined 678.91, or 7.3 percent, to 8,579.19. The Nasdaq Composite Index decreased 5.5 percent to 1,645.12. Twenty stocks fell for each that rose on the New York Stock Exchange.

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`Contagion of Fear’

The S&P 500 extended its 2008 tumble to 38 percent and is poised for its worst yearly performance since 1937. Its valuation slid to 10.9 times estimated earnings, the cheapest versus reported earnings since 1985. The Dow’s 35 percent tumble in 2008 puts it on course for its worst year since 1931.

“This is what happens when the contagion of fear spreads,” said Quincy Krosby, who helps manage about $380 billion as chief investment strategist at the Hartford in Hartford, Connecticut. “No one is paying attention to fundamentals. People are very, very scared. Ultimately investors decide to sell.”

All 10 industry groups in the S&P 500 tumbled at least 3.4 percent. Technology companies fell the least after International Business Machines Corp. posted higher-than-estimated profit and said the financial crisis will not hold up earnings. IBM rose as much as 5.3 percent in the morning before following the market lower and closing down 1.7 percent at $89.

Stocks rose in the first hour of trading as investors snapped up shares of technology and commodity companies trading at their cheapest price-to-earnings valuations since Bloomberg began tracking the data in 1995.

`Completely Overshot’

“There are problems out there, I know that, but stocks have completely overshot on the downside,” Kevin Rendino, who manages $10 billion at BlackRock Inc., told Bloomberg Television in an interview taped before stocks began their retreat. “There are a number of companies that offer unbelievable risk-reward potential.”

Almost $900 billion was wiped off the value of U.S. equities today. About 2 billion shares changed hands on the NYSE, 42 percent more than the same time last week. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurances against further declines in the S&P 500, jumped 11 percent to a record 63.92.  

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7 Responses to “U.S. Stocks Tumble, Sending Dow Below 9,000; GM, Insurers Slide”

1. Lorenzo Thomas Says:
   October 9th, 2008 at 4:30 pm

   “They want a fascist planet with the superwealthy ruling it all
   Since we’re too independent, America must be led to fall
   When our credit’s been exhausted to subdue the Middle East,
   They’ll install our debtor nation in the body of The Beast
   Traitor…Dare call it treason”

   http://www.youtube.com/watch?v=uw5dP5gy2Vs

   –The Cornbread Mafia

2. D. Sigafus Says:
   October 9th, 2008 at 4:59 pm

   What really happened today? The market opened and was on an upswing the first few hours and then all of a sudden – it began to crash. What is not being talked about except for a few major news outlets in one liners on the Internet is that our government opened short selling up once again this morning. So far, I’ve heard nothing said about this over the airwaves. Why is that?

   Who exactally these short sellers are is still unknown – but a major transfer of wealth took place today. One should only ask why our government after six straight days of stock market declines would they opt to open back up short selling? Is is because there are plans to go in and buy up part of the banks and other industry and therefore the price would be reduced or was it a means to transfer wealth to European investors who were the short sellers (whoever they may be) to make a killing – or just plain and simple the market was rebounding and that does not work into the overall major plan they have for America and the rest of the world — a New World Order – A New Financial System.

   One can only wonder …

3. et Says:
   October 9th, 2008 at 6:44 pm

   I think it’s obvious, they have to devalue the dollar to the point it’s close to the peso & Canada dollar. we can’t have the amero until they have stolen every last cent. the bailout was stupid. I’m no economist but I do know how inflation works. when the dollar is worth enough to wipe your crack with it, then…. here comes the amero. It worked for Hitler and thats their plan for us. I bet the printing presses are printing them now.

4. mythicshadow Says:
   October 9th, 2008 at 7:04 pm

   http://ca.youtube.com/watch?v=Vv3yuRdD2oE

5. nescio Says:
   October 9th, 2008 at 8:22 pm

   I agree with post #2
   History repeating itself, why change a winning formula.
   It’s only gonna get worse folks, buckle up and hang on to your hats.
   Dollar is going bey bey

6. nescio Says:
   October 9th, 2008 at 8:22 pm

   oops i ment post # 3

7. OldSchool Says:
   October 9th, 2008 at 8:39 pm

   I’m figuring it won’t belong after the Dow crashes another 1,000-1,500 points that our dictator steps in and declares a financial national emergency and locks everything down good and tight and declares martial law before he cancels the presidential puppet show (the rigged elections). Makes perfect sense……just as long as THEY get to keep all them hundreds of billions of dollars…….