This is a big shock, and in response Wall Street has set a new record, a bad one. A 778 one day fall in the Dow. This from Reuters
The Dow industrials plunged overnight in the blue-chip average's biggest one-day point drop ever after US lawmakers unexpectedly rejected a $700 billion financial bailout, spooking investors who saw it as essential to halting a global market meltdown.
The Dow lost about 778 points and posted its biggest daily percentage decline since the October 1987 stock market crash, while the benchmark S&P 500 also had its worst day in 21 years after the House sent the bailout plan to defeat by a vote of 228 to 205.
The tech-heavy Nasdaq had its worst day since April 2000 when the Internet bubble collapsed.
The failure of the bill, which would have let the Treasury buy up bad mortgage debt from struggling banks, added to serious concerns after the credit crisis claimed new victims, including Wachovia Corp and a bevy of European banks.
Fear was deep and widespread, as investors dumped stocks for the relative safety of US government bonds. The Chicago Board Options Exchange Volatility Index, Wall Street's main barometer of investor fear, jumped 39 percent to 48.40, a nearly six-year high, and was at 46.72 at the close.
"I am shocked. Credit markets were struggling even with the prospect this bill was going to get passed. Now the bill doesn't get passed and it just throws one more monkey wrench into the mix," said Bob Doll, global chief investment officer of equities at BlackRock Inc, one of the world's largest asset managers.
The Dow Jones industrial average sank 777.68 points, or 6.98 percent, to 10,365.45. The Standard & Poor's 500 Index was down 106.59 points, or 8.79 percent, at 1,106.42. The Nasdaq Composite Index was down 199.61 points, or 9.14 percent, at 1,983.73.
An index of financial services shares lost 16 percent, while Bank of America Corp fell 17.6 percent to $30.25.
Goldman Sachs slid 12.5 percent to $120.70.
"This is bad in a lot of different ways," said Bill Strazzullo, partner and chief market strategist at Bell Curve Trading, in Boston. "Short-term, the market is getting crushed, but more importantly, we are telling clients we could be at the beginning of a whole new down phase. There is the potential for the S&P 500 to go all the way down to 1,000."
The bailout's demise comes after US bank Wachovia was forced to sell most of its assets to Citigroup in a deal brokered by the Federal Deposit Insurance Corp.
