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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowInvestors’ despair about financial companies and the recession sent the Dow Jones industrial average to another unwanted milestone today: its first drop below 7,000 in more than 11 years.
The Dow fell 4.2 percent in today’s trading, dropping 299 points to close at 6,763.29.
The Dow’s descent has been swift. It’s taken only 14 sessions for the average to go from above 8,000 to below 7,000. So far this year, the Dow is down 22.9 percent.
Broader stock indicators also slid. The Standard & Poor’s 500 index fell 34.27, or 4.7 percent, to 700.82, and the NASDAQ composite index fell 54.99, or 4 percent, to 1,322.85.
The market’s slide wasn’t anywhere near the largest is has seen since last fall, but the tumble below 7,000 was nonetheless painful. The credit crisis and recession have slashed more than half of the average’s value since it hit a record high over 14,000 in October 2007. And now many investors fear the market could take a long time to regain the lost 7,000.
“As bad as things are, they can still get worse, and get a lot worse,” said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he believes there’s a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.
The “game-changer,” he said, will be the housing market and whether it can stabilize.
A recovery will also require signs of health among financial companies, but so far in 2009, it is clear that banks and insurance companies’ losses are multiplying despite hundreds of billions of dollars in government help.
The market fell today after insurer American International Group Inc. posted a staggering $61.7 billion in quarterly losses and as the government agreed to inject more money into the company. AIG will get another $30 billion in loans, on top of the $150 billion the government has already invested.
About 10 stocks fell for every one that rose on the New York Stock Exchange, where volume came to a heavy 1.57 billion shares.
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