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Dow off 161 as stocks extend fall

Other major indexes also decline amid Wall Street worries about U.S. bailout proposal.

September 24, 2008|Tim Paradis | The Associated Press

Stock markets extended their declines Tuesday as lawmakers expressed skepticism about the proposed $700-billion bailout for financial institutions.

The Dow Jones industrial average rose as much as 125 points in early trading but retreated as Treasury Secretary Henry M. Paulson and Federal Reserve Chairman Ben S. Bernanke testified about the rescue plan before the Senate Banking Committee -- and faced more second-guessing than many investors had expected.

Some investors also have doubts about how long it would take for a bailout to be implemented and how effective it would be.

"There's skepticism about whether the $700-billion number is the right number," said Jim Herrick, manager and director of equity trading at Baird & Co.

The Dow ended down 161 points, near its low for the day, after plunging 372 points Monday.

Still, trading appeared more orderly Tuesday than the day before, when investors rushed into hard assets such as oil and gold.

In a sign of continued strong demand for short-term government securities, the yield on the three-month Treasury bill fell to 0.72% from 0.84% late Monday. The benchmark 10-year Treasury note fell to 3.8% from 3.84%.

The dollar, whose decline Monday drove some of the frenetic trading in other markets, regained some of its lost ground against the euro, while gold and oil prices fell after big gains Monday.

The Dow fell 161.52 points, or 1.5%, to 10,854.17. With Monday's 370-point decline, the blue chips are down 534 points, or 4.7%, over two days.

Broader stock indicators also declined Tuesday. The Standard & Poor's 500 index dropped 18.87 points, or 1.6%, to 1,188.22, and the Nasdaq composite index fell 25.65 points, or 1.2%, to 2,153.33.

In futures trading, oil for November delivery fell $2.76 to $106.61 a barrel, retreating after moving higher over the last week amid increasing concerns about the financial system.

Gold futures slid $18.40 to $885.50 an ounce after jumping $43.30 on Monday.

Financial stocks finished mixed as some investors worried that the government's plan could prove inadequate to save some banks. Should the government pay too little for assets, some banks might be forced to book ruinous write-offs and risk going under.

Bank of America fell 85 cents, or 2.5%, to $33.30, while Washington Mutual fell 13 cents, or 3.9%, to $3.20.

Some energy stocks lost ground as oil declined. Occidental Petroleum fell $4.08, or 5%, to $77.16.

And some industrial stocks slid as investors worried about the well-being of the global economy. Aluminum maker Alcoa fell $1.21, or 4.5%, to $25.59. Seed company Monsanto dropped $4.85, or 4.2%, to $112.14.

But some technology stocks advanced. Computer chip maker Intel rose 13 cents to $18.63, while Sprint Nextel climbed 27 cents, or 4.2%, to $6.77.

Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange.

Overseas, key stock indexes fell 1.9% in Britain, 0.6% in Germany and 2% in France. Markets were closed in Japan.

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