Dow drops to 8,579, reaching '03 levels

NEW YORK - A runaway train of a sell-off turned the anniversary of the stock-market peak into one of the worst days in Wall Street history Thursday, driving the Dow Jones industrials down a breathtaking 678.91 points and deepening a financial crisis that has defied all efforts to stop it.

Stocks lost more than 7 percent, $872 billion of investments evaporated and the Dow fell to 8,579. When the average crashed through the 9,000 level for the first time in five years in the final hour of trading, sellers had only begun to hit the gas pedal.

As bad as the day was, even worse was the cumulative effect of a historic run of declines: The Dow suffered a triple-digit loss for the sixth day in a row, a first, and the average dropped for the seventh day in a row, a losing streak not seen since 2002.

"Right now the market is just panicked," said David Wyss, chief economist at Standard and Poor's in New York. "Everybody just wants to get their money and put it under the mattress."

It all took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 percent of its value.

Paper losses for the year add up to a staggering $8.3 trillion, according to preliminary figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in America.

It was the second straight day that Wall Street was rocked by a final-hour sell-off.

The trading floor was quieter than usual because of the Jewish holiday of Yom Kippur. Wall Street awoke to news that the federal government was brandishing a new weapon against the financial crisis - considering seeking an equity stake in major U.S. banks in order to stabilize them.

But that step appeared to be as ineffectual as the others Washington has rolled out in recent weeks. Acquiring a stake in the banks would be yet another startling intervention by the government in the free market, but economists said President Bush was left with little choice because of the credit markets, where tight lending has choked off the everyday cash that is the lifeblood of the economy.

"In normal times, this would be out of the question, but in the present dire situation, I think the government should be employing all the powers that it can," said Sung Won Sohn, an economics professor at California State University-Channel Islands.

Thursday's sell-off was triggered when a major credit-rating agency put General Motors Corp. and its finance affiliate under review to determine whether it should be downgraded. Stock in GM, one of the 30 components of the Dow Jones industrials, lost 31 percent of its value. Triple-digit declines occurred almost instantly.

On Thursday, the Dow was above 9,200 after 1:30 p.m. in New York and still above 9,000 after 3 p.m. The pressure to sell was so intense that the Dow kept dropping precipitously for 10 minutes after the 4 p.m. closing bell as losses were tabulated.

In percentage terms, the drop in the Dow exceeded the day the markets reopened after the Sept. 11, 2001, terrorist attacks. It was not close to the 22.6 percent decline on Black Monday in 1987, the last stock-market crash.

Trader Christopher Lotito watches the numbers fall as he works on the floor of the New York Stock Exchange on Thursday.