Selling decimates the markets; gold rallies, T-bill rates dive

Calamity rules in markets today after the House, in a shocker, voted down the financial-system bailout bill.

Stocks have crumbled on Wall Street, with the Dow Jones industrials down 519 points, or 4.7%, to 10,623 at about 11:40 a.m. PDT.

Broader indexes are in far worse shape. The New York Stock Exchange composite has dived 7.2%; the Nasdaq composite is off 6.4%.

The indexes are, however, up from their worst levels just after the news flashed across TV screens that the bailout bill had failed. The Dow was down as much as 702 points at its low.

Still, the selling extends far beyond the U.S. stock market, as investors worldwide fear severe economic repercussions without a plan to bolster the banking system.

As of about 11:40 a.m. PDT:

--- Financial stocks are leading Wall Street lower. The Standard & Poor’s 500 index of major financial stocks has plummeted 9.8%. Just 162 stocks are up for the session on the New York Stock Exchange, while 3,029 are down.

--- In foreign trading, the Canadian stock market is down 7%; Mexico is off 6.1%. In Brazil trading was briefly halted after the market fell 10.2%. Trading has resumed and the market now is off 10.5%.

Earlier, European markets were hammered amid a rash of government rescues of ailing banks, including the Dutch-Belgian giant Fortis NV and British mortgage lender Bradford & Bingley. The average European blue-chip stock sank 5.1%.

--- Investors and traders are dumping nearly every commodity, expecting demand to dry up if the global economy contracts sharply. Crude oil futures are down $9.26 to $97.63 a barrel. The Reuters/Jefferies CRB index of 19 commodities is down 5%.

The only major commodity up for the day: gold, the classic haven. The metal is up $22.30 to $910.80 an ounce.

--- In another sign of the rush to safety, currency traders are bailing out of the British pound, the Brazilian real and most other currencies in favor of either the dollar or the Japanese yen. The euro is at $1.448, down from $1.461 on Friday.

--- Where’s the money going, besides gold? Treasury securities, again -- even as the Federal Reserve resorts to another huge infusion of cash into the financial system. The 3-month T-bill yield has tumbled to 0.51% from 0.85% on Friday. The 10-year T-note has fallen to 3.63% from 3.85%.

Photo: Stock index futures traders in Sao Paulo, Brazil, today. Mauricio Lima / AFP Getty Images

Comments

[Monica Berlin]

There's money in movies!!!!!

[bob kholos]

The Republicans and Herbert Hoover raise their ugly heads again.
This action by the GOP may push Barack Obama over the top.

[alan macnair]

Re: The house voting down the bailout ? Typical !
Are there no good leaders ? Are there none who can
make selfless decisions w/o playing politics ? For once get your ego out of it
and serve the people like you were elected to do. Where are the Abe Lincoln's when we need one..just one.

[rudy]

This may bail out may be good for the market but is it good for you and I. Go slow and hold their feet to the fire.

Where is Wall Strret in this bail out. How much are they going to pay.
Trickldown capitalism - thank you all you loyal advocates.

[Daniel Flavin]

Why is it when Main Street America loses its job, its the "Free Market" at work purging weakness from the economy, but when Wall Street starts losing jobs its "Financial Armageddon" and the end of Capitalism. Let the Free Market work and keep the government out of it..........................................

[brian king]

thank goodness your elected reps, or some of them, are more frightened (at this time) of the american people than the international thieves and coupon clippers of the private not federal, federal reserve and wall street. the plan is a scam of the bankers in their interests, not that of the american taxpayer (deptor) and people. the bankers are going to tank the economy, so they can steal assets for 10c on the dollar. wake up america, wake up !

[KyThrifter]

I believe that the government should stay out of it and let the free market work as it should, like a previous poster said. There is too much government in our lives. Like our welfare system wasn't overwhelming enough - lets hand out money to the big & bad out there....... GAH - pass the bail out for Americans - divide the funds up amongst American 18 & ^ - Doesn't that sound like a good plan? - at least at first glance? This all makes me want to move to the boonies and live off the land and just be vvvvveeeeeerrrrrrrryyyyyy old school. lol.

[Brent]

Why is it such a double standard the financial markets for years have been repossessing assets from the middle income people. I dont see a bail out for those people. Especially as the jobs slowly keep moving to foreign countires. All I ever heard was this was going to generate more quality jobs for Americans where are they? All I can say is every Republican cries wolf way to many times like Iraq, now Iran, and now the financial market. The Dems believe we should just support everyone instead of being accountable and earn what you get. We new a new party in government..

[Bill]

Such fools that think this bailout is for "Wall Street". Such fools that think the collapse of our financial system and markets won't hit "Main Street" harder than Wall Street. Such fools we elect to Congress who are more about playing politics to the public and re-electing themselves than serving the people. Here we are now ... the firesale of America to the world because our politicians have no courage, integrity or common sense (and, actually, haven't had any in quite a while).

[James Monachino]

Deflation is an Unfamiliar Visitor- -

As the World Wide deflationary meltdown continues understand your goal isn't to profit but survive. Why do I say that:

* Because investors can't receive the accurate information they need in a timely manner to make good decisions.
* Financial Institutions World Wide can't update their models fast enough to reflect dynamically changing negative values.
* Falling commodity prices are rolling into falling prices for goods and services resulting in shrinking profit margins.
* De-Leveraging of the credit markets are taking out 100's of billions of dollars of credit that was once available in the system an is impinging on organic consumer and business growth.
* Businesses are being forced to realign profits with expenditures resulting in tightening of capital goods and labor force adjustments.
* Federal, State and Local governments are experiencing drops in revenue thus increasing deficits and ultimately reducing services and employment.

Protect your principal - - and understand in a deflationary environment commodity price fall across the board including gold.

James Monachino