Dow Jones Industrials is trading under 10,000

NEW YORK (MarketWatch) -- Stocks tumbled on Monday, sending the Dow industrials below the 10,000 mark for the first time in nearly four years, as last week's $700 billion bailout package and government interventions in Europe over the weekend failed to soothe nervousness in global markets.

European governments didn't reach a common deal on bailouts over the weekend. Instead each country is handling the fallouts on its own, with Germany backing its retail deposits, following similar moves by Ireland and Greece. Holland nationalized the Dutch operations of Fortis, and a new 50 billion euro financing package was reached for Germany's Hypo Real Estate.

Shares in Europe saw their biggest one-day fall on record, with the pan-European Stoxx 600 index sliding 7.6%.

"With global equity markets selling off today, and the developments which followed the weekend European crisis meeting, much nervousness abounds," said Jennifer Lee, an analyst at BMO Capital Markets.

The Dow Jones Industrial Average was down 491 points, or 4.8%, to 9,833, after falling by nearly 600 points to a low of 9,738.

It's the first time the blue-chip index has traded below the 10,000 mark since Oct. 29, 2004.
"Psychologically, it does play a role," said Owen Fitzpatrick, head of U.S. equity at Deutsche Bank, of the Dow's drop below the key level. "But investors are not concentrating on this," he said. "The big worry of the moment remains liquidity and the economy."

Among blue-chip financial shares, Citigroup Inc. fell 9%, Bank of America dropped 5% and J.P. Morgan Chase lost 5.4%.

"We've had the passage of [the $700 billion] bailout but it will takes time for it to start getting traction," Fitzpatrick said.

"Right now, it's about stabilizing the financial system and then see how much collateral damage has been done to the economy," he said. "The clear message is that the global economy is slowing rapidly, and the magnitude of the slowdown is starting to be realized by the market."

The S&P 500 fell 58 points, or 5.3%, to 1,041 and the Nasdaq Composite lost 110 points, or almost 5.6%, to 1,837, led by a 5% decline in shares of eBay, which announced it was slashing 10% of its workforce.

Trading volumes showed 818 million shares exchanging hands on the New York Stock Exchange, and 652 million shares trading on the Nasdaq. Declining issues topped gainers by 30 to 1 on the NYSE and by 8 to 1 on Nasdaq.

President Bush signed a $700 billion bailout package into law Friday just as the latest U.S. employment report showed 159,000 jobs lost in September.

"These really are unforgiving times and it was a case of buy the rumour, sell the fact as the S&P 500 moved from being up more than 3% as the last few necessary 'yes' TARP bill votes were being registered, to a near four-year low at the close," said Jim Reid, a strategist at Deutsche Bank.

Last week, the Dow lost 7.4%, the S&P 500 fell 9.4%, and the Nasdaq lost 10.8%.

Dallas Fed President Richard Fisher and Chicago Fed President Charles Evans both are due to speak on the U.S. economy on Monday. Federal Reserve Chairman Ben Bernanke is due to speak on Tuesday.

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