Stock prices and U.S. dollar plunge as oil soars
Anxiety mounts over the government's proposed $700-billion bailout. The Dow falls 372 points.
NEW YORK — Stock prices and the dollar plunged today -- and oil and other commodities soared -- on growing anxiety about the effect of the government's proposed $700-billion rescue of the financial system.
The Dow Jones industrial average tumbled 372.75 points, or 3.3%, to 11,015.69, erasing the index's 368-point gain Friday. The Standard & Poor's 500 index lost 3.8%, and the Nasdaq composite index fell 4.2%.
It was the Dow's sixth triple-digit increase or decrease in a row, and its fifth 350-point-plus move in six trading days.
Some investors who pulled money out of stocks poured it into commodities.
Oil futures shot up $16.37 a barrel to settle at $120.92 on the New York Mercantile Exchange after spiking as high as $130 in the last hour of trading. An index of 19 major commodities soared 3.9%.
The dollar posted its biggest decline on record against the nearly decade-old euro, and yields on Treasury bonds rose over concerns about the large amount of new debt that the government could take on to fund the bailout plan.
"Today, it's all about the dollar getting crushed. Investors are back to looking at oil as a hedge," said Phil Flynn, vice president and senior market analyst for the Alaron Trading Co. in Chicago.
The euro surged to $1.480 from $1.447 late Friday. An index of the dollar's value against other major currencies slid 2%.
The yield on the 30-year Treasury bond rose to 4.40% from 4.38% on Friday. The yield on the 10-year Treasury bond rose to 3.83% from 3.81%.
After leading the stock market up Thursday and Friday, financial stocks led the way down today, with an S&P index of financial issues sinking 8.5% despite a ban imposed Friday by the Securities and Exchange Commission on "short selling" of financial stocks. A short seller borrows and then sells a stock in the expectation that the price will decline.
Shares of Morgan Stanley surged early in the session after the Wall Street firm announced that Japan's largest bank would buy a 10% to 20% stake for as much as $8.4 billion to shore up Morgan's capital. But the stock slid back with the rest of the market to end the day down slightly.
Goldman Sachs Group slid 6.9% the day after it and Morgan Stanley announced that they would become bank-holding companies, subjecting them to more government regulation.
walter.hamilton@latimes.com
Times staff writer Ron White contributed to this report.
