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Stocks fall as anxieties rise

February 24, 2009|Associated Press

Wall Street turned the clock back to 1997 as investors unable to extinguish their worries about a recession with no end in sight dumped stocks again Monday.

The Dow Jones industrial average tumbled 251 points to its lowest close since May 7, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997. It's as if the decade's dot-com surge, collapse and subsequent recovery never occurred.

The Dow is a little more than 100 points from 7,000. Both indexes have lost about half their value since hitting record highs in October 2007.

"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.

Investors pounded most financial stocks, and technology stocks also fell.

The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6%. On Monday, the major indexes plunged through the lows they reached in late November, at the height of the credit crisis.

"There's just so much skepticism in the overall market and [the question is] is the government doing proper things to get us out of this problem. Obviously the stock market is voting no," said Ryan Detrick, senior strategist at Schaeffer's Investment Research.

The Dow dropped 250.89 points, or 3.4%, to 7,114.78. It last closed this low on May 7, 1997, when it finished at 7,085.65. The Dow hasn't traded below the 7,000 mark since October 1997. The index is down 14% over the last 10 sessions.

The S&P 500 index fell 26.72 points, or 3.5%, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.

The 14-month recession has decimated the major indexes: The Dow is down 49.8% from its record highs of October 2007, while the S&P 500 index is down 52.5%.

Meanwhile, the technology-laden Nasdaq composite index dropped 53.51 points Monday, or 3.7%, to 1,387.72. Investors looking for a bottom also dumped smaller stocks. The Russell 2,000 index of smaller companies fell 16.38 points or 4%, to 394.58.

Commodities also dropped. Gold prices, which hit near-record levels last week as investors sought safety, fell $7.20 an ounce Monday to $994.60 on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, gaining 0.013 of a cent on the euro. Light, sweet crude fell $1.59 to settle at $38.44 a barrel.

Morgan Smith, investment counselor for Burns Advisory Group, said investors were now pushing out their expectations for a recovery in the industry until after this year.

"Everyone is trying to grasp at some type of bottom," Smith said. "The market is just trying to figure out if it has priced in a worst-case scenario."

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged from late Friday at 2.77%. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.29% from 0.26% on Friday.

Among tech stocks, Hewlett-Packard fell $1.96, or 6.3%, to $29.28, and Intel dived 70 cents, or 5.5%, to $12.08.

Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7%, to $2.14, and Bank of America, which gained 12 cents, or 3.2%, to $3.91.

Overseas, Britain's FTSE 100 fell 1%, Germany's DAX index fell 1.95% and France's CAC-40 slipped 0.8%. Earlier, Japan's Nikkei stock average fell 0.5%.

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