Dow Falls Below 10,000; Down 800 at One Point

The stock market plunged today and the Dow Jones industrial average marked its lowest close in nearly four years as American and worldwide investors grew even more worried about the health of the global economy and the availability to easily borrowed cash.

The Dow settled at 9,955.50, down nearly 370 points and 3.6 percent from last week. The close capped a roller coaster day for stocks, with the Dow dropping 800 points in the mid-afternoon before rebounding by the day's end.

It was the first time that the Dow closed below 10,000 since Oct. 26, 2004. The Dow first closed above the 10,000 mark back on March 29, 1999.

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The Nasdaq lost 4.3 percent today and the S&P 500 fell 3 percent. Oil closed lower at $87.81 per barrel.

Hugh Johnson, the chairman and chief investment officer of Johnson Illington Advisors in Albany, N.Y., said that optimism about the financial system bailout package approved by Congress last week wasn't enough to ease fears about the current credit crunch.

"Even though it's good news that the bailout package was passed, it will take time to begin to implement it and even if it's implemented, we don't know if it's going to work," he said. "It's one thing to provide banks the liquidity to make loans; it's another thing to get banks to make loans. It may be that policymakers are pushing on a string.

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Johnson said if companies can't borrow the money they need to meet payrolls, pay bills and finance inventories, they might have to cut production and jobs.

That, in turn, could result in less consumer spending.

It "creates a vicious cycle," he said.

The Dow hit its lowest point of the day at 2:46 p.m., when it was down 800.06 points,

What a difference a year makes.

Almost a year ago, on Oct. 9, 2007, the Dow reached its all-time high closing of 14,164.53.The Dow ended today 4,209.03 points, or 29.7 percent, below that high.

Overseas Markets Suffer

It was also a grim picture overseas.

Over the weekend, governments across Europe rushed to the aid of ailing banks, and the governments of Germany, Ireland and Greece said they would insure bank deposits.

The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, and France's BNP Paribas agreed to buy a 75 percent stake in Fortis' Belgium bank after a government rescue failed.

Despite those efforts, overseas markets still saw significant declines.

Japan's Nikkei lost 4.25 percent today, Hong Kong's Hang Seng index fell 5 percent, the German DAX fell 7.1 percent, Great Britain's FTSE 100 fell 5.8 percent and France's main stock index plunged 9 percent.

Mike Ryan, the head of wealth management research for the Americas at UBS, said today's sell-offs weren't entirely voluntary. In some cases, he said, they were forced by margin calls -- demands by brokers that investors deposit money or sell assets once the value of their investments dropped below a certain level.

Ryan said that the margin calls "are part and parcel in the process of unwinding and deleveraging," or cutting down on the use of debts in financing investments.

The deleveraging happening now, he said, will take time and will continue to be a drag on the economy.

Ryan said that current market conditions make it more likely that the Federal Reserve will once again cut the key federal funds rate.

Given falling oil and agricultural prices, he said, inflation risks are receding.

The U.S. and other countries, so far, have taken a "parochial approach" to addressing the financial crisis by addressing it on a "local level," Ryan said.

"The approach is almost exclusively done on a country-by-country, event-by-event basis," he said.

Ryan said that, instead, the world's richest countries should be working together to address the financial crisis with a "global approach."

That should include, he said, but not be limited to, a coordinated effort to cut rates by the different central banks, including the European Central Bank, which has yet to cut rates recently because of inflation concerns.

The Associated Press contributed to this report.