As a new bout of fear gripped the financial markets, stocks fell sharply again on Thursday, continuing a months-long plunge that has wiped out the gains of the last decade.
The credit markets seized up as confidence in the nation’s financial system ebbed and people rushed to put money in Treasuries, the safest of investments. Some markets are now back to where they were before Congress approved the $700 billion financial rescue in October.
The Dow Jones industrial average fell nearly 445 points, or 5.6 percent. The broad market sank to its lowest level since 1997 — before the dot-com boom, the Nasdaq market bust and the ensuing bull market that drove stocks to record heights.
With Thursday’s rout, $8.3 trillion in stock market wealth has been erased in the last 13 months.
Investors are growing increasingly worried that big banks like Citigroup, JPMorgan Chase and Bank of America, which have all received billions of dollars from the government to bolster their finances, are still too weak. The price of Citigroup’s shares plunged 26.4 percent on Thursday and other financial shares fell to fresh lows.
The situation might have improved, but for the constant drumbeat of negative economic indicators like rising unemployment and lower consumer spending. It would appear that it's hard to dig yourself out of an acute financial mess at the same time that you're economy is diving into a recession.