Major stock market indexes fall to 1997 levels

NEW YORK -- Major market indexes staggered to their lowest levels in a decade Monday, pulled lower by investors' rapidly waning confidence.

The Dow Jones industrial average tumbled 251 points to its lowest close since Oct. 28, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997.

All the major indexes slid more than 3%. The Dow is just over 100 points from 7,000.

"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.

Most financial stocks were pounded even as government agencies led by the Treasury Department said they will launch a revamped bank rescue program that includes the option of increasing government ownership in financial institutions without pouriing more taxpayer money into them.

Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be possible as banks continue to suffer severe losses. They're also worried that banks' losses will escalate as the recession sends more borrowers into default.

"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."

The Treasury and other agencies issued a statement early Monday after The Wall Street Journal reported that Citigroup c is in talks for the government to boost its stake in the bank to as much as 40%. Analysts said the market, which initially rose on the statement, wanted more details.

"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."

Meanwhile, technology stocks fell after The Wall Street Journal reported that Yahoo's yhoo new chief executive is planning a companywide reorganization.

"There's nowhere to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.

The market's decline extends massive losses from last week, when the major stock indexes tumbled more than 6%. The indexes plunged through the lows they reached in late November, at the height of the credit crisis.

At the close Monday, preliminary figures showed the Dow down 250.89 points or 3.4% to 7,114.78.

The Standard & Poor's 500 index was off 26.72 or 3.47%, to 743.33.

The technology-laden Nasdaq composite index dropped 53.51 or 3.7% to 1,387.72.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where volume came to a light 1.03 billion shares.

Among tech stocks, Hewlett-Packard Co. fell $1.56, or 5%, to $29.68, and Intel Corp. dove 67 cents, or 5.2%, to $12.11.

Other big decliners included General Electric, which dropped to a 14-year low of $8.80, but later traded down 48 cents, or 5.1%, at $8.90. Alcoa tumbled 43 cents, or 6.8%, to $5.86.

Some financial stocks managed to hold on to their earlier gains, including Citigroup, which rose 33 cents, or 16.7%, to $2.28, and Bank of America, which gained 30 cents, or 7.9%, to $4.09.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.78% from 2.79% late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.28% from 0.26% Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.90 to $38.13 per barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.99%, Germany's DAX index fell 1.95%, and France's CAC-40 slipped 0.82%. Earlier, Japan's Nikkei stock average fell 0.54%.