TIM PARADIS September 29, 2008 02:12 PM EST Associated Press
NEW YORK — Fear swept across the financial markets Monday, sending the Dow Jones industrials down as much as 705 points, as the financial bailout package was defeated by the House.
As the vote was shown on TV, stocks plunged and and investors fled to the safety of the credit markets, worrying that the financial system would keep sinking under the weight of failed mortgage debt.
"Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group. "This isn't a market for the timid."
The markets were highly volatile, with the Dow regaining ground to trade with a loss of about 360, then falling backing again, trading down 481.39, or 4.32 percent, at 10,661.74. Broader stock indicators also fell. The Standard & Poor's 500 index declined 63.13, or 5.20 percent, to 1,150.14, and the Nasdaq composite index fell 124.29, or 5.69 percent, to 2,059.05.
With Wall Street nervous that the plan may not pass, the yield on the 3-month Treasury bill fell to 0.68 percent from 0.87 percent on Friday. That showed that investors were prepared to get meager returns on an investment as long as it was secure.
The Federal Reserve declined to comment on the market's decline.