The fear gripping the stock market escalated Thursday as panicky investors pushed the Dow Jones industrial average to its biggest one-day percentage loss in more than two decades and worries grew that efforts to ease the global credit crisis wouldn't work.
The Dow plunged 678.91 points, or 7.3%, to close at 8,579.19, its lowest level since May 2003. The blue-chip index is now down 39% from its all-time high set one year ago Thursday -- with half of that decline coming in the last seven trading days alone.
In Asia early today, markets opened sharply lower, with stocks sinking as much as 11% in Tokyo and 8% in Hong Kong.
The cascade of anxious selling indicated that many investors who held on through most of the recent wave of declines were now throwing in the towel, some analysts said.
"People are scared," said Conrad Gann of TrimTabs Investment Research in Sausalito, Calif., which tracks mutual fund investments. "They are tired of losing money week after week in the stock market."
For former surfer Donald Wise of Newport Beach, the stock plunge reminded him of wiping out at the legendary Wedge on the Balboa Peninsula in his youth. "You are three feet down and you can see the sky and the sun, but you can't seem to get there," he said.
A similar fear is spooking the stock market, said Wise, now a hotel industry consultant. "We just came out of a time that was so incredibly heady and then suddenly the pendulum swung far in the other direction," he said. "And nobody knows how far it's going to go."
Governments around the world are desperately trying to stem the credit crisis that is engulfing stock markets and threatening economic damage. Steps taken include a $700-billion plan passed by Congress last week to buy up bad mortgages and a coordinated interest-rate cut Wednesday.
But analysts said there were few indications Thursday that the credit markets were loosening. Interest rates on loans between banks continued to rise, signaling that the arteries of global finance remained clogged.
In one hopeful sign, California officials expressed increased optimism that the state would be able to sell $4 billion in short-term notes next week to raise cash for routine expenses. Last week, Gov. Arnold Schwarzenegger warned that the state might ask the federal government for a loan if credit markets remained all but paralyzed.
