The Dow Jones Industrial Average breaks and closes below 8000 for the first time in 5 years. U.S. stocks thudded sharply lower on Wednesday to finish at more than five-years lows, its lowest close since March 31, 2003. Financial powerhouse Citigroup Inc. pummeled by its greatest ever one-day percentage drop, falling 23.4% to end at $6.40, its largest one-session decline since the market collapse on Oct. 19, 1987, as fears intensified about its fate as well as the U.S. auto industry. "It's a combination of comments from [Fed Chairman Ben] Bernanke and [Treasury Secretary Hank] Paulson that has us on pins and needles. Everything is hinging on what happens with the General Motors bailout" said Art Hogan, chief market strategist at Wall Street firm, Jefferies & Co. A day after the Big Three auto makers CEOs went begging on Capitol Hill, there doesn't seem to be a whole lot of confidence that will be enough. Shares of GM (General Motors Corp.) closed at $2.79, the lowest close since 1942 over 60 years ago. Equities remained solidly lower after the release of the minutes from the last Federal Open Market Committee meeting. Volume on the New York Stock Exchange topped 1.6 billion, and for every stock on the rise, more than 15 fare falling. When will the market stop going down? People have never been so curious about a subject in their life. After today’s close at 7,997 it has lost almost 50% its value. Some people claim the money they invested in the markets 10 years ago has now been wiped out. Leaving them out on money and lost. Historically, on average, the markets give you a 10% return yearly. Every headline we see lately reminds us that our economy is in a world of hurt. Picking up the newspaper or tuning in to the nightly news all you see is flash….Dow drops 200, 500, 700 points. The next day there may be some relief ….but only for a moment. The Dow has its biggest one day advance in history up 960+ points, only to give it all up by the end of the week. The most important reason why people are worried, is that they are losing value on things that were very overvalued so what is the true value is the big question? We listen to our parents talk about people losing their jobs, homes, and retirement accounts. In consumer Ed I learned that what used to be 401K’s are now 201K’s, (that’s financial speak for a yearly savings program you can contribute to for your future retirement years). For kids that are planning on going to college next fall and that counted on student loans, well... they could have a tough time. Banks are not real comfortable lending money out to consumers for college, autos or any type of loans. There is no trust going on between banks and people looking for loans. I guess the bottom line to all this is, live within your means, save money when you can and be somewhat conservative.
Sources: Marketwatch.com
Istockanalyst.com