US stocks plummet further; Dow below 9,000 points

October 10th, 2008 - 8:09 am ICT by IANS  

New York, Oct 10 (DPA) US stocks plummeted again Thursday and the Dow Jones Industrial Average dropped below 9,000 points for the first time in five years, as a series of US and global efforts to tackle the financial crisis have failed to calm investors.Both the blue-chip Dow and broader Standard & Poor’s 500 tumbled more than 7 percent. The Dow has now lost more than 35 percent of its value since reaching all-time highs above 14,000 one year ago. The S&P’s seven straight days of losses mark the longest downward streak since 1996.

The plunges came as the US Treasury indicated it would buy up shares in banks to help inject capital into shaky financial institutions. On Wednesday, a joint rate cut by seven of the world’s central banks failed to spark a market rally.

US officials have also continued warning that a $700-billion rescue package would take some time to have an impact on the massive credit crunch that has struck the US economy.

“It took us a while to get here and it’s going to take us a while to get out of this thing,” White House economic advisor Edward Lazear told CNN.

Finance ministers from the Group of Seven (G7) industrial nations meet Friday to consider additional responses to the financial crisis. There were indications that a summit of world leaders from the Group of Eight (G8), which includes Russia, could take place next week.

The Dow plunged 678.91 points, or 7.33 percent, to 8,579.19. The broad-based Standard and Poor’s 500 tumbled 75.02 points, or 7.62 percent, to 909.92. The high-tech Nasdaq Composite index shed 95.21 points, or 5.47 percent, to 1,645.12.

The bulk of the day’s decline was in the final hour of trading, a pattern that has been repeated often during the crisis.

“People have lost faith in everything,” Philip Orlando, the chief market strategist of Federated Investors Inc, told Bloomberg News. “We’re dealing with an investment community of atheists right now. Valuations no longer matter.”

Car manufacturers led the sell off after market researcher JD Power & Associates forecast a sharp decline in car sales this year and next. General Motors Corp fell 31 per cent to its lowest level since 1950.

Oil giant Exxon Mobil Corp tumbled by the most in 21 years after the price of crude oil fell below 85 dollars per barrel in New York.

International Monetary Fund Managing Director Dominique Strauss-Kahn warned Thursday that the world was on the “cusp” of a recession as the crisis has spread well beyond the US.

The IMF Wednesday cut its global growth forecast to 3.9 percent this year and 3 percent last year. Growth of below 3 percent is rated by the IMF as a recession.

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