The Washington Post
October 10, 2008

WASHINGTON — Fear and foreboding took hold Thursday on Wall Street, as the market again plunged and investors became convinced that the nation is on the verge of a deep and prolonged recession. The decline continued in Asia, where stocks plummeted in early trading today.

  • A d v e r t i s e m e n t

The government took steps toward an extraordinary public investment in U.S. banks and General Motors’ stock fell to its lowest price since 1950 on fears it will not be able to weather the downturn. Share prices fell across every industry and for each of the 30 stocks in the Dow Jones industrial average, which was down 678.91, or 7.3 percent, at 8,579.19. The declines came on the one-year anniversary of the Dow’s closing high.

“I’ve never seen a panic like this,” said David Wyss, chief economist at Standard & Poor’s. “I’ve seen stock market drops, but not an overall panic.”

The plunge came in a stomach-churning 90 minutes. The Dow was down just 140 points in the early afternoon. But then, wave after wave of selling began to roll through the market.

Stocks are on track for their worst year since 1937.

“It’s a domino effect. Stocks are falling out of bed. There is distrust in the market and distrust in the government that is trying to heal this,” said Peter Cardillo, economist with New York-based Avalon Partners.

Continuing its efforts to stanch the damage, the Bush administration said Thursday that it is working on a plan to inject government cash into some of the nation’s troubled banks. Meanwhile, global economic policymakers are gathering in Washington today for the International Monetary Fund and World Bank annual meetings, and will try to find coordinated responses.

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