Panic strikes US Market

Dow suffers worst one day loss in twenty one years as bailout plan gets rejected

US stocks were pushed back to the wall on Monday, 29 September, 2008 and the Dow suffered its worst loss in more than twenty years. The rejection of the $700 billion bailout plan for the financial market acted as the main catalyst for the steep losses of the day. Other than that there were a couple of other factors too. European governments agreed to a $16.4 billion bailout for Fortis NV, Belgium's largest retail bank. Also, the British government said it was nationalizing mortgage lender Bradford & Bingley, which has a $91 billion mortgage and loan portfolio.

The Dow Jones industrial Average ended the day with a huge loss of 777.77 points at 10,365.45. It surpassed the loss of 684 points in incurred the day market reopened after 11 September, 2001 crashes. The Nasdaq Composite Index, finished today lower by 199.61 points at 1,983.71. S&P 500 finished lower by 106.59 points at 1,106.42.

All the thirty Dow stocks plunged in the red. American Express and Banc of America were the topmost losers shedding almost 18% each. All ten of the economic sectors posted a loss. The worst performing sector, financials, fell 16%, while the best-performing sector, consumer staples, fell 4.2%.

The House of Representatives failed to pass the Emergency Economic Stabilization Act today. The $700 billion financial relief plan was rejected today. A total of 218 votes were needed to pass the vote. Democrats voted 141 for, 94 against. Republicans voted 66 for, 132 against. Presumably, Congress will work toward a new plan to ease the financial market turmoil, although it is not clear how long it might take.

Among major news of the day at Wall Street, Citigroup is acquiring Wachovia's banking operations. Citi will absorb up to $42 billion of losses on a $312 billion pool of loans. Wachovia will continue to own AG Edwards and Evergreen. Market started the downward slide today with this piece of news. But then, indices just plunged once the failure of the bailout plan hit the market.

Nasdaq suffered heavy losses today after Apple shares skidded by 18% once two firms cut their rating on the stock.

Among earning news of the day, Circuit City posted a second quarter loss of as revenue fell 9.6% year-over-year. The consumer electronics retailer withdrew its previous 2009 outlook so it can take a comprehensive review. On the other hand, Walgreen earnings per share by 12.5% which matched expectations. The company said it saw a negative impact on overall margins due to an increase in nonretail businesses.

The strength in the dollar and concerns over global growth drove down the price of most commodities. Oil prices were down 11% to $95 per barrel. Gold bucked the negative trend, thanks to the precious metal's perceived safety.

Volume on the New York Stock Exchange topped 2 billion, with decliners ousting advancers more than 15 to 1. On the Nasdaq, 1.1 billion shares exchanged hands, and decliners ran past advancing stocks more than 6 to 1.

For tomorrow, economic data will take center stage. The release of the Chicago PMI and Consumer Confidence reports will draw some attention. In light of the huge losses seen today, the behavior of the market itself will be the focal point on Tuesday.