NEW YORK — Wall Street turned the clock back to 1997.
Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since May 7, 1997, while the Standard & Poor’s 500 index logged its lowest finish since April 11, 1997. It’s as if the decade’s dot-com surge, collapse and subsequent recovery never occurred.
The Dow is just over 100 points from 7,000. Both indexes have lost about half their value since hitting record highs in October 2007.
“People left and right are throwing in the towel,” said Keith Springer, president of Capital Financial Advisory Services.
Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank-rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.
Although the government has said it doesn’t want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They’re also worried that banks’ losses will keep escalating as the recession sends more borrowers into default.
“The biggest thing I see here is the incredible pessimism,” Springer said. “The government is doing a lousy job of alleviating fears.”
The Treasury and other agencies issued a statement after The Wall Street Journal reported Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent.
The Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on May 7, 1997, when it finished at 7,085.65. The Dow hasn’t traded below the 7,000 mark since October 1997. The index is down 14 percent over the past 10 sessions.
The Standard & Poor’s 500 fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.
The technology-laden Nasdaq composite dropped 53.51, or 3.71 percent, to 1,387.72.
The market’s decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. While falling to their 1997 levels, the major indexes plunged through the lows they reached in late November, at the height of the credit crisis.
Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America, which gained 12 cents, or 3.2 percent, to $3.91.
“There’s no main driver of the down day,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.
Asian markets tumbled today, with Hong Kong’s benchmark Hang Seng losing 3.7 percent. Japan’s Nikkei 225 lost 2.4 percent as Nomura dived 8.6 percent in morning trading.
