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U.S. stock indexes fell to their lowest levels in more than 12 years as one of the world's most prominent banks and an icon of American manufacturing traded as penny stocks....
Not even after five consecutive declines did traders want to own stocks overnight, said Joseph Saluzzi, co-founder of Themis Trading.
"Nobody wants to get in the way as the freight train comes down the embankment," he said.
The Dow Jones Industrial Average fell 281.40 points, or 4.09%, to 6594.44, its lowest close since April 1997. The Nasdaq Composite fell 54.15, or 4.00%, to 1299.59. The broad Standard & Poor's 500 index shed 30.32, or 4.25%, to 682.55, 56% below its bull-market peak in October 2007. That's the biggest drop for the market since the 1930s.
One emblem of that decline: Citigroup fell 11 cents, or 9.7%, to 1.02 after dipping below $1 for the first time ever earlier in the session. In May 2007, Citi was the biggest bank in the U.S. by market capitalization and traded for more than $55. Since then, the collapse of the mortgage securitization business and the slide in value of other assets has necessitated the rescue of Citigroup and other financial institutions, raising the specter of nationalization.
"If you had told me in the summer of 2007 that [Citi] would dip below $1, I would have said 'you're crazy'," said Saluzzi. "They have so many liabilities, so much bad stuff, they wouldn't even be trading if they weren't being supported by the government.
"The banks are a disaster."
[SNIP]
As in the 1930s, nothing seems to stop a contagion of confidence crises from spreading from one part of the financial sector to the next.
"It's just a never ending spiral," said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund.
