Wall Street goes tumbling down to 12-year low

February 24th, 2009 - 11:13 am ICT by IANS  

New York, Feb 24 (IANS) Big losses have sent two major gauges of Wall Street - the Dow and S&P 500 - tumbling to their lowest levels not seen in nearly 12 years as investors worried about the government’s efforts to slow the recession.
The Dow Jones industrial average Monday lost 250 points, or 3.4 percent, ending at the lowest point since May 7, 1997. The S&P 500 index lost 26 points, or 3.5 percent, ending at the lowest point since April 11, 1997.

The Nasdaq composite lost 53 points, or 3.7 percent. The tech-fuelled index has held up better than the rest of the market so far this year, closing Monday at the lowest point since Nov 20, 2008.

“It’s fear-based selling,” Dave Hinnenkamp, CEO at KDV Wealth Management, was cited as saying by CNNMoney.com. “The fact that we’re touching these multi-year lows tells you we don’t know where the bottom of this thing is.”

Stocks gained in the morning on reports that the government may boost its stake in Citigroup as it briefly assuaged fears that the troubled bank would have to be nationalised. But the early advance quickly petered out, as the worries of the last few weeks returned.

“There is just nobody who wants to buy right now,” Ron Kiddoo, chief investment officer at Cozad Asset Management, was cited as saying.

“The scepticism is back,” Kiddoo said. “I think we need to hear some optimistic talk from our leaders and soon.”

Stocks are now extra vulnerable with the major gauges at the multi-year lows, said Gary Webb, CEO at Webb Financial Group.

“Worries about how long it will take for the government programmes to have an impact and worries about the health of the banks and the autos are all there,” Webb said.

But there is also just the day-to-day reality that many investors are losing money and don’t know when they are going to stop losing money, he said.

After the close of trade, JPMorgan Chase said it was cutting its dividend to 5 cents per share from 38 cents per share currently.

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