The global sell off in stock markets continued on Monday as governments, businesses, and individuals absorbed news that even extraordinary efforts at economic intervention, like the $700 billion US bailout of Wall Street, was not taking the bite out of worldwide fears concerning collapsing financial sectors.
The bellweather Dow Jones Industrial Average (DJIA) was down over 740 points at 03:15 PM ET nearing last Monday's historic 777 point drop and verging on unchartered territory. By 03:45 PM ET the DJIA had pared earlier losses down about 500 points. The Dow closed below 9956 down over -360 points and below the psychologically significant mark of 10000 for the first time in half a decade.
The NASDAQ, S&P 500, and 10 Year Treasury Bond were all sharply lower at the close of trading Monday.
Credit borrowing remained anemic, near freezing, as volatility in world markets shook trading floors from Tokyo to New York on Monday.
The BBC reports London's key UK share index lost 7.85%, its steepest percentage fall since 1987. In Paris, the CAC 40 dropped 9%, its single worst day since 1988. The Russian RTS plunged 19%, its worst one-day point drop in history. Russia suspended trading on both its RTS and Micex indices at points throught the trading day Monday.
Brazil's stock market was promptly shuttered half an hour after opening as its index plummeted 10 percent.
Iceland suspended trading in all financial shares including Glitnir, Kaupthing, and Landsbanki.
BBC's Robert Peston said Germany's guarantee of personal banking accounts was merely a good-faith promise and not backed by force of law.
Meanwhile, the Managing Director of the International Monetary Fund (IMF), Dominique Strauss-Khan, spurning unilateral moves by individual governments, urged European leaders to take unified action to stem the spreading global financial crisis.
In the United States the Federal Reserve announced plans to pay interest to financial institutions for bank reserves in an action aimed at igniting any flow of credit among businesses and consumers. The Fed followed its policy change by injecting another $150 billion for auction at 24 and 85 day terms to support liquidity in money markets.
Bank of America said it intends to spend up to $8.4 billion to restructure the mortgage loan portfolio acquired from Countrywide Financial Corporation, the subprime mortgage originator, purchased on July 1, 2008.
eBay, Inc., buckling under low consumer spending outlooks, will cut 10 percent of its workforce or about 1,000 jobs.
On Capitol Hill, the US House of Representatives began hearings, chaired by Congressman Henry A. Waxman (D-CA), into the bankruptcy and collapse of Lehman Brothers Holdings, Inc. The main witness at today's hearing was Richard S. Fuld, Jr., former Chairman and CEO of Lehmans.
Fuld repeatedly told the committee that he still believes in the sanctity of positive public statements he made on the eve of Lehmans demise. His testimony seemed to conflict with documentary evidence, including some provided by Fuld's own lawyers, suggesting a corporate leader who was receiving dire private forecasts while making unwarranted public pronouncements of confidence and optimism.
Fuld also told committee members that he sought millions of dollars in bonuses for Lehman executives even as the corporation teetered on the brink of imminent collapse.