S&P 500 sinks below November low

NEW YORK -- Investors, not yet convinced that the buying opportunity of a lifetime has arrived, sent stocks tumbling on Monday to their lowest levels in more than 11 years amid a growing crisis of confidence in the government's ability to fix the ailing financial system.

In what amounts to a psychological blow, the Standard & Poor's 500 closed below its November low. It fell 3.5% to 743.33, extending its bear market losses to 52.5%, its biggest decline since the 1930s.

Increasingly, jittery investors are unwilling to commit cash to a stock market riddled with economic uncertainty and a lack of a clear, coherent game plan from the government to rejuvenate the banking system and get credit flowing again. Citigroup shares jumped 9.7% to $2.14 and Bank of America rose 3.2% to $3.91 amid more rumors of coming government aid.

"The biggest issue today is the banks," says Timothy Vick of Sanibel Captiva Trust. "In the absence of a bank plan from the government that makes sense to shareholders, I don't think the economy or stock market will get any upward momentum."

The S&P 500 is at levels not seen since April 14, 1997. That year, President Clinton was starting his second term, then 14-year-old Tara Lipinski became the youngest world figure skating champ and Spice Girls won album of the year with Spice.

"An enormous amount of wealth in 401(k)s has been wiped out," says Edward Yardeni, president of Yardeni Research. "It isn't just the fat cats getting killed, it's everyone. It is demoralizing."

Indeed, since the October 2007 top, the stock market, as measured by the Dow Jones Wilshire 5000, has declined $10.4 trillion in value. The S&P 500's plunge below the prior lows is significant because it illustrates the broad nature of the sell-off. The Nov. 20 low of 752.44 was also viewed as the last line of defense, a level that had found buying support and held last November and three times during the 2000-02 bear market.

"These levels are psychological, they are like lines in the sand," Yardeni says. "When they get washed away, you wonder where the next line is." Analysts warn stocks could tumble as much as 20% more.