Stocks plunged today, falling more than 700 points, on news that the House voted down the $700 billion bailout package hammered out over the weekend.
Equity and bond markets alike reacted sharply. The Dow Jones industrial average tumbled 770.59, or 6.9%, to 10,372.54; the S&P 500 plunged 105.95, or 8.7% to 1,107.06; the Nasdaq composite fell 199.61, or 9.1%, to close at 1,983.73. Also, the yield on U.S. Treasuries dropped 19.5 basis points to 3.637 as investors sought the safety of government paper. All numbers are preliminary.
Todays House vote suggests a lack of appreciation for what is being implied by the danger signals being flashed by credit markets, in terms of businesses being able to function and people being able to keep their jobs, said Jim Swanson, market strategist with MFS Investment Management.
Robert Doll, vice chairman of BlackRock and portfolio manager of a number of highly rated large-cap equity funds, said, My guess is theyll try again, add a little something here, something there to please enough Republicans to eke out majority support.
Still, most of us assumed the thing was done today and the markets disappointment is obvious, Mr. Doll said. If things can be worked out quickly, the markets can get by, but we dont want to get back where we were 10 days ago when confidence was clearly imploding, he added.