Worst Week on Wall Street Ends Down
World financial leaders met to quell market stress and strengthen institutions.
Oct. 10, 2008— -- The misery on Wall Street continued today, with stocks falling again as investors put a close on one of the worst weeks in the financial world's history.
Financial leaders from the United States, Japan, Britain, Germany, France, Italy and Canada met for an emergency meeting this afternoon in an effort to halt spiraling anxiety about the world's financial markets.
Following the meeting in Washington, D.C., U.S. Treasury Secretary Henry Paulson said the group "finalized an aggressive action plan" to quell the stress on markets worldwide and strengthen institutions.
"Never has it been more essential to find collective solutions to ensure stable and efficient financial markets and restore the health of the world economy," he said.
Paulson said that the government is developing a bank stock purchase plan to directly "purchase equity" from "a broad array of financial institutions."
"We are developing strategies to use the authority to purchase and insure mortgage assets and to purchase equity in financial institutions, as deemed necessary to promote financial market stability," Paulson said.
The Treasury secretary's announcement comes as an attempt to recoup stability in the volatile market. The Dow lost another 128 points today to end the week at 8,451.19. The Dow lost another 128 points today to end the week at 8,451.19.
That's down from 1,874.19 points, or a shocking 18.2 percent from last week's close of 10,325.38. Just a year ago, the Dow hit its all-time high close of 14,164.53. In the last 12 months, the index lost 40.3 percent of its value.
In a tiny ray of hope, the Nasdaq gained 4.39 points today but the S&P 500 lost another 1 percent.
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In another turbulent day, the Dow was down as many as 693 points and up at one moment 298 points. That startling 991-point swing left many queasy. At every positive turn of the Dow, traders on the floor of the New York Stock Exchange started to cheer.
But in the end there was no cheering as an awful week only got worse.
Today was the eighth consecutive day of losses on Wall Street. The last "up" day for the market came at the end of September.
"You're seeing social psychology play out on a grand stage here. Basically it's fear feeding on fear feeding on fear," said Stephen Leeb, chairman of the investment committee at Leeb Capital Management. "The intensity and unrelenting selling is unlike anything we have seen."
Still Leeb is optimistic. He said he believes that the market will inevitably come back and basically the harder the fall, the more intense the rebound will be.
"The most horrific decline in certainly anyone's memory, and possibly in history, could turn very quickly into being a very dramatic increase in stock price," Leeb said. "This is not the time to give up."
"Take a deep breath and just act as if its turbulence on a plane," he said. "There is very little you can do about it but hope that the leaders of the world do come together and make the right decisions."
President Bush once again tried to calm the markets, reading a statement in the Rose Garden after the stock market opened this morning.
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