Wall Street Tumbles, Joins Global Sell-Off

By Julie Kent. Published on 10/06/2008 - 1:57am

The passage of the $700 billion government bailout of U.S. financial institutions last week appears to have done little calm the fears of investors. On Monday, as the markets opened, Wall Street took a tumble, joining a global selloff as fears that the financial crisis will spread through economies around the world, despite the bailout of the U.S. and other governments.

Early in Monday morning trading, the credit market continued to be strained, and investors piled heavily into government bonds. The Dow Jones fell by more than 200 points.

The continued drop on Wall Street, and in financial markets around the world, comes amid the realization that the bailout bill won't quickly unfreeze the credit markets, and that many banks continue to have difficulties in accessing cash.

Abroad, various European governments have rushed to save failing banks over the past few weeks. Governments of Germany, Ireland, and Greece said that they would guarantee bank deposits. Mean while Franches BNP Paribas agreed to acquire a 75% stake in Fortis's Belgium bank after a government rescue there failed, and the German goverment and financial industry agreed ona $68 billion bailout for Hypo Real Estate Holding AG, a commercial property lender.

Over the weekend, governments across Europe rushed to prop up failing banks. The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed.

Investment experts believe that these programs will be effective, but not in the short term. Right now, the markets are in a more challenging position.

In the first hour of trading, the Dow Jones Industrial average fell 231.12, or 2.24% to 10,094.25. The Nasdaq composite index fell 49.39, or 2.54% to 1,898.00, the Standard & Poor's 500 index fell 28.21 or 2.57% to 1,071.02, and the Russell 2000 index of smaller companies fell 15.63 or 2.52%, to 603.77.

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