US stocks slid again today, as panicked investors unwound risky bets in a global sell-off on fears that tighter credit would spawn world recession.
Volume was heavy across the board and trading was volatile, with all three major US stock indexes gyrating widely between steep losses and gains since the open.
Shares of Morgan Stanley, an investment bank that recently converted to a bank holding company, lost 36 per cent to the lowest in over a decade after ratings agency Moody's warned it might cut the company's long-term debt ratings and those of rival Goldman Sachs.
At one point, the Dow Jones industrial average slid as much as 8 per cent to break below 8,000 for the first time since April 1st, 2003, and then briefly turned positive, along with the broader market as expectations that the sell-off might be overdone collided with fears of more losses.
The Dow Jones industrial average was down 457.26 points, or 5.33 per cent, at 8,121.93. The Standard & Poor's 500 Index was down 52.29 points, or 5.75 per cent, at 857.63. The Nasdaq Composite Index was down 69.93 points, or 4.25 per cent, at 1,575.19.
Uncertainty about what authorities will do next to contain fallout from the credit turmoil contributed to the fear, driving the Chicago Board Options Exchange Volatility Index up 14 per cent to another intraday record high above 73.
Morgan Stanley shares slumped to $7.94 on the New York Stock Exchange.
Goldman Sachs shares fell 23 per cent to $78.10 on the New York Stock Exchange. Investors worry that a cut in ratings would further complicate the companies' ability to raise capital.
Shares of energy companies dragged on the broader market as oil prices sunk to a fresh 12-month low below $79 a barrel on signs that a faltering global economy will curb demand.
Shares of Exxon Mobil were a top drag on the Dow, sliding more than 13 per cent to $58.82 on the NYSE, as shares of Chevron plummeted more than 11 per cent to $56.88.
The S&P energy index was down 12.5 per cent, while the financial index declined 3.2 per cent.
A pullback in the cost for banks to borrow overnight dollars from, or among, each other tempered some market anxiety but the cost to borrow dollars over three months shot higher again, indicating credit markets effectively remain jammed.
On the bright side, shares of General Motors Corp climbed almost 5 per cent to $4.99 after the company said bankruptcy was not an option that the car maker was considering as it grapples with "unprecedented challenges related to uncertainty in the financial market."
US front-month plunged over 8 per cent to as low as $78.61, a fresh 12-month low, on the New York Mercantile Exchange. At midday, NYMEX front-month crude was down $7.03 at $79.57 a barrel.
Reuters