Dow Jones Stock Market 778 Point 7% Crash -2

We are talking 778 point loss in single day in the American stock market Dow Jones. We are going to continue with that news.

 

“The stock market was definitely taken by surprise,” said Drew Kanaly, chairman and CEO of Kanaly Trust Company, referring to the House vote. “If you watched the news stream over the weekend, it seemed like it was a done deal. But the money is being held hostage to the political process.”

 

Stocks had fallen from the get-go Monday morning. In addition to expectations for the bailout, there was also news that troubled Wachovia had to sell its banking assets to Citigroup. A number of European banks also collapsed.

 

But the possibility that the House won’t pass the bailout plan caused stock losses to accelerate.

 

“It’s a huge disappointment,” said Jack Ablin, chief investment officer at Harris Private Bank.

 

Although another version of the plan will likely go before Congress, investors are concerned that passing the bill could be a more drawn-out process.

 

On Monday afternoon Treasury Secretary Henry Paulson said markets around the world are under great stress and that a plan needs to be passed as soon as possible.

 

“People do expect that there will be some plan put in place, but even before this vote, there was doubt as to whether it would be enough to avert the crisis,” said Ken Kam, portfolio manager of the Marketocracy Masters 100 (MOFQX) fund.

 

Investors thought they would be debating whether the plan was good enough, he said, not whether the plan would even go through.

 

But the ‘good enough’ question remains in place.

 

“We are charting new territory in policy tools and implementation with this program and there’s no guarantee that it will work,” said Alan Gayle, senior investment strategist at RidgeWorth Investments.

 

“That a number of institutions haven’t been able to last through the negotiations adds to the uncertainty,” Gayle said, referring to Washington Mutual’s failure on Friday and the buyout of Wachovia Monday.

 

Stocks are also extremely choppy and volatile as Wall Street moves to the end of the third quarter. Financial institutions and funds are expected to have their books settled before Wednesday, so there is a lot of last-minute scrambling, Gayle said.

 

Treasury prices rallied, sending yields lower, as investors sought safety in government debt.

 

 

News courtesy CNN Money