Stocks Plummet in Global Market Rout
NEW YORK (Reuters) - Stocks slid more than 6 percent on Monday, with the Dow diving to its lowest level in almost five years, on fears the global economy was hurtling into recession despite government efforts to contain the fast-spreading financial crisis.
Wall Street's drop was part of a global sell-off, and as severe as the U.S. losses were, they paled in comparison to sharp declines across Europe and in emerging markets. In Russia, Brazil and Peru, trading was temporarily suspended.
The emergency rescue of two big European banks and a move by several European governments to guarantee bank deposits intensified fears of a potential global recession.
The sharp drop came in the first session since the U.S. Congress approved a $700 billion bailout of the financial industry. Financial services stocks led the sell-off, with the S&P's financial sub-index down 8 percent.
Energy companies' shares plummeted as the price of oil dropped to an 8-month low below $90 a barrel on expectations the growing financial crisis will further slow already faltering global fuel demand.
"The economy, the global economy is a worry, with credit tight and everyone hoarding cash," said Neil Massa, senior U.S. trader at MFC Global Investment Management.
"The global markets are worse than even we are and that's not good news for any companies that depend on the overseas markets."
The Dow Jones industrial average fell 711.01 points, or 6.89 percent, to 9,614.37. It is the first time the Dow has traded below 9,700 for the first time since November 2003.
The Standard & Poor's 500 Index skidded 82.19 points, or 7.48 percent, to 1,017.04, while the Nasdaq Composite Index slid 158.73 points, or 8.15 percent, to 1,788.66.
In the latest twist in the fast-changing U.S. financial landscape, Citigroup said it is suing Wachovia and Wells Fargo and is seeking more than $60 billion in damages over Wells Fargo's competing bid for Wachovia.
Wells Fargo slipped 7.1 percent to $32.29, Wachovia shares dropped 5 percent to $5.90 and Citigroup lost 11.4 percent to $16.26.
Among other financial shares, Bank of America fell 8.6 percent to $31.50 after the bank agreed to settle claims brought by U.S. attorneys-general regarding risky loans originated by mortgage lender Countrywide Financial in a deal that could be worth more than $8.6 billion.
Traders speculated the sell-off might spur global central banks to coordinate interest-rate cuts to shore up investor confidence, but not everyone thought that would make a significant difference.
"I don't even think that a rate cut now will have much effect other than some psychological effect," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto, Canada.
Among shares of energy companies, Exxon Mobil Corp fell 3.9 percent to $74.80, while shares of Chevron Corp lost 7.1 percent to $73.71.
U.S. front-month crude tumbled $5.88 to $88.00 a barrel.
Shares of General Electric, a diversified manufacturer and economic bellwether, dropped 10.6 percent to $17.42.
Technology companies, which often have significant overseas exposure, slid sharply. Shares of Oracle Corp, the world's third-largest software maker, slid 9 percent to $17.73.
To stave off the widening credit turmoil in Europe, Germany, Austria and other governments pushed to reassure depositors about their funds.
(Editing by Jan Paschal)
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