Manic Monday on Wall Street

The Dow Jones Industrials lost another 3.5 percent Monday, finishing 369 points down and closing below 10,000 for the first time in four years. At its worst, the Dow was off 800 points, an all-time record.

It is sinking in that the federal rescue plan will not kick in fast enough to address what is quickly becoming a global crisis. Wednesday is the deadline for troubled financial firms to file applications for help with their bad debt.

The Dow dropped 300 points in the first few minutes, causing some investors to blanche, others to stick to the belief this was time to hunt for bargains.

"Me, I'm a long-time investor, so I mean the time to buy is now," said firefighter Scott Williams.

Others say the precipitous drop indicates investors are concerned the waves of bad economic news aren't over

"People not realizing a lot of these assets are very underpriced, but they don't want to step in and buy because they may think that it could become even more underpriced," said Prof. Jonathan Berk with the Stanford Graduation School of Business.

Europe's political leaders held another round of emergency talks as more banks there are faltering due to the credit freeze. Overseas markets in Europe fell 7 to 8 percent. The Russian market dropped a staggering 19 percent.

The prospect of a global banking meltdown also worried American investors.

"Last week, people still thought we had an American financial crisis with European spillovers. Now people are saying, waiting a minute, the European banks are up to their neck in this," said Prof. Brad Delong with the UC Berkeley Department of Economics.

Delong is a former treasury official in the Clinton administration. He speculates other investors may be signaling doubts that the federal rescue plan will work.

"The bailout is too little, too late, and the wrong kind of thing," said Delong.

The Treasury Department is pressing on with its rescue plan, giving financial institutions very short deadlines to apply for help. The deadline is Wednesday afternoon.

While some experts say it will take months before the rescue plan can be judged a success or failure, one trading floor employee says the stock market is due for a correction.

"It could be a major correction, but it could bring sanity back to everything. For the last 10 or 15 years, prices have just gone insane," said trading floor employee Walter Sczesney.

Others hope the turbulence will end soon.

"I just hope it bottoms soon. I really do," said Williams.

The Treasury Department says it will focus on the expanding global banking crisis later in the week. A meeting is scheduled for Friday with finance ministers from the "group of seven" -- made up of the seven largest industrial countries in the world.

Copyright © 2024 KGO-TV. All Rights Reserved.