U.S. Stocks Tumble, Sending Dow Below Lowest Close in 11 Years
Originally posted on Bloomberg
U.S. stocks tumbled, sending the Dow Jones Industrial Average below its lowest close since 1997, after Senate Banking Committee Chairman Christopher Dodd said some struggling banks may need to be taken over by the government.
Citigroup Inc. and Bank of America Corp., which combined have received more than $90 billion in federal aid, slid more than 30 percent after Dodd told Bloomberg Television that it may be necessary to nationalize some banks for a short time. Europe’s benchmark index sank to a six-year low, while Japan’s Topix plunged to the lowest since 1984. Treasuries rallied and gold climbed above $1,000 an ounce as investors sought a haven from riskier assets.
The Standard & Poor’s 500 Index decreased 2.6 percent to 758.34 at 1:38 p.m. in New York. The benchmark index is down more than 8 percent on the week and less than 1 percent above its 2008 bear market low. The Dow fell 182.08 points, or 2.4 percent, to 7,283.87.
“There’s so much uncertainty and a decent chance of the worst case, nationalization, that it’s complete speculation to mess with Citigroup and Bank of America,” said Edwin Walczak, head of U.S. equities at the American unit of Vontobel Holding AG of Switzerland. “The price is telling you that.” Vontobel’s U.S. unit manages $6 billion.
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