Stocks tumble again after brief rebound from opening 700-point drop
— -- Stocks extended their devastating losses Friday as Wall Street headed toward its eighth straight day of losses over fears the global economy is set for a protracted recession.
The Dow Jones industrial average — already down 2,271 points in seven sessions — fell almost 700 points in the opening minutes of trading Friday, before buying sent the index briefly into positive territory and traders at the New York Stock exchange cheered. But the joy didn't last long.
The brief rally was ignited as computer-driven "buy" orders kicked in, but investors began selling heavily again as markets around the world panicked because credit markets remain mostly frozen, still posing a threat to the global economy.
In midday trading, the Dow was down 418.08, or 4.9%, to 8,161.11. At its low point Friday, the Dow was at 7,882.51, just 60 points above its low in Wall Street's last bear market, 7,286.27, reached Oct. 9, 2002.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 50.14, or 5.5%, to 859.78, while the Nasdaq composite index fell 74.55, or 4.5%, 1,570.57.
Frozen credit markets and a loss of confidence in the world's financial system have caused the Dow Jones industrials to drop 21% in just 10 trading days. The blue chip index plunged 678 points Thursday, and is heading to its worst weekly point drop, and one of its biggest weekly percentage drops, since being created 112 years ago.
The selling had taken the Dow below the 8,000 level and the Standard & Poor's 500 index below 900.
Going into Friday's session, losses for the year add up to a staggering $8.3 trillion, according to preliminary figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in the U.S.
"The U.S. and advanced economies' financial systems are now headed toward a near-term systemic financial meltdown...Day after day, stock markets are in free fall," New York University economist Nouriel Roubini wrote on his website. "We have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies."
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