Markets around the world have taken a beating, with a key US market average falling to its lowest level in four years. VOA's Michael Bowman reports from Washington, the market plunge is being driven by persistent concerns that tight credit could further dampen the global economy.
U.S. stocks opened sharply lower, mirroring losses in Europe, Asia, and much of the developing world. In New York, the Dow Jones Industrial average crossed below an important psychological floor - the 10,000 mark - for the first time since October, 2004. The Dow was roughly five percent lower in midday trading. It has lost about a quarter of its value so far this year.
Major markets were hard-hit across the globe.
Stocks in Tokyo and Hong Kong finished the day down more than four percent. Losses in London and Frankfurt exceeded seven percent, while Paris closed down more than nine percent. India's stock market fell to a two-year low, while trading in Brazil had to be halted twice after a 10-percent plunge followed by an additional five-percent decline. Mexico's stock index fell nearly seven percent at midday.
Deepening concerns about tight credit and the apparent inability of central banks to combat it are eroding global market confidence, according to London-based financial analyst Michael Wilson.
"However much governments borrow, however much liquidity [cash] is put into the system, it [market confidence] needs trust and confidence being restored between banks, and there is none of that this morning," said Michael Wilson.
Last week, President Bush signed a massive rescue package to aid U.S. financial institutions facing ruin amid a continuing wave of home foreclosures. The bill allows the treasury to buy bad debt stemming from risky home mortgages, and raises the limit on federally insured bank accounts.
Speaking in Texas, President Bush said the $700-billion bailout measure is not an immediate cure-all for the nation's economic woes, but will help create conditions for an eventual recovery.
"It is going to take a while to restore confidence in the financial system," said President Bush. "But one thing people can be certain of is that the bill I signed is a big step toward solving this problem.
Several European governments have also initiated financial bailouts and issued deposit guarantees.
Boston-based investments advisor Art Hogan says European countries are facing the same tough choices the United States has wrestled with in recent weeks.
"Germany and the rest of Europe are not quite as [far] along the learning curve of what needs to be done to straighten out the balance sheets of some of the financial institutions," said Art Hogan.
Amid further signs of global economic weakness, crude oil prices fell further, while gold rose sharply.
Chris Varveras of the Washington-based National Association for Business Economics says the United States appears headed for a recession.
"Our economists have become more negative on the economic outlook for the next few quarters, with about two-thirds of us believing that we are either already in a recession or will soon enter recession," said Chris Varveras.
The U.S. central bank has announced new steps to stimulate credit markets. The Federal Reserve says it will begin paying interest on commercial banks' reserves and will expand its loan program to troubled institutions.