Wild Day Caps Worst Week Ever for Stocks

The Dow Jones Industrial Average capped the worst week in its 112-year history with its most volatile day ever, as hopes for a major international bank-rescue plan were overwhelmed at day’s end by another wave of selling. Some investors who normally would be jumping to buy beaten-down stocks after a 22% drop over eight trading days said the relentless declines have left them shell-shocked and unwilling to take new risks. Some spent the day trying to protect themselves from further declines reports the Wall Street Journal.

The Dow fell 697 points shortly after the opening bell, and remained down most of the day. It surged to a 322-point advance less than half an hour before the close. Investors stampeded into bank stocks as reports circulated that the Group of Seven leading industrial countries was going to agree on a plan to rescue major banks, and that Morgan Stanley had been assured that it would receive funding from a Japanese bank. Hopes briefly blossomed that the worst might finally be over.But investors weren’t willing to enter the weekend that exposed to stocks, and in the waning minutes, amid brutal up-and-down swings, stocks gave back all the late gains. The Dow industrials finished down 128 points, or 1.49%, at 8451.19, the lowest finish since April 25, 2003. Many bank stocks, however, finished higher.After regular stock trading ended, the G-7 nations agreed on guidelines to address the crisis, but stopped short of the kind of concrete action plan investors had sought, raising the risk of further market chaos. Treasury Secretary Henry Paulson later provided more details about the U.S. government’s plan to take equity stakes in banks.This week’s 18% decline, and Friday’s 1018.77-point swing from low to high, were the biggest since the Dow was created in 1896. Until now, the Dow’s worst week was in 1933. Total trading volume of stocks listed on the New York Stock Exchange also hit a record, 11.16 billion shares.The damage has been devastating both to households and to major investment institutions. Investors’ paper losses on U.S. stocks now total $8.4 trillion since the market peak one year ago, based on the value of the Dow Jones Wilshire 5000 index, which includes almost all U.S.-based companies.Read more here: Wild Day Caps Worst Week Ever for Stocks