- The Washington Times - Monday, March 9, 2009

UPDATED:

Wall Street staggered through another day of losses Monday, investors apparently uncertain which way to turn, although some major bank stocks rallied in the face of a broader slide that pushed the Dow Jones Industrial Average down another 80 points to a new 12-year low.

The markets fluctuated early in the session and at one point moved into green territory, which sent the Nasdaq Composite up more than 1 percent back through the 1,300 level. But the upsurge didn’t last long: The tech-laden index dropped nearly 2 percent; the other two major indexes, at least 1 percent.

At the close, the Dow Jones Industrial Average declined 79.89, or 1.21 percent, to 6,547.05. The Nasdaq fell 25.21, or 1.95 percent, to 1,268.64. The benchmark Standard & Poor’s 500 dipped 6.85, or 1 percent, to 676.53.

The Dow reached its lowest point since April 1997, and the S&P 500 hit its lowest mark since September 1996. The Nasdaq was at October 2002 levels.



Nouriel Roubini, the New York University professor who predicted the financial crisis, said in an interview with Bloomberg.com that it is “highly likely” the S&P 500 will drop to “600 or below.” He added that there is “some possibility” it could hit 500.

The benchmark index of 500 different companies has fallen about 25 percent this year following a 38 percent drop in 2008 in what Bloomberg.com said marked its steepest decline since 1937 — the Depression year when the hydrogen-filled Hindenburg zeppelin burst into flames in Lakehurst, N.J.

The price of a barrel of light, sweet crude oil bumped up $1.63 to close at $47.15 on the New York Mercantile Exchange on worries that OPEC might again cut production in order to curtail supplies to boost prices.

Some bank stocks rose, with Wells Fargo & Co. up more than 15 percent and Bank of America surging about 19 percent. General Electric Co., whose stock has been beaten down in the past several weeks because of its capital arm, went up about 5 percent.

The announced purchase by drug giant Merck & Co. of its huge competitor, Schering-Plough, for $41 billion appeared to have little impact on the markets.

Billionaire Warren Buffet, a stock market guru to some, told CNBC listeners Monday what everyone else with investments has known for months — that the economy “has fallen off a cliff.”

Mr. Buffett, in an interview at his home of Omaha, Neb., indicated that fear has driven down the markets.

“Fear is very contagious,” he said. “You can get fear very quickly, and you don’t get confidence for some time.”

Mr. Buffett, in a live appearance on the markets-oriented TV network, predicted in line with economists and analysts that unemployment likely will go higher before the severest recession in a generation has run its course. The official unemployment rate is 8.1 percent. Some economists have predicted double-digit joblessness.

“It’s fallen off a cliff,” he said of the economy. “Not only has the economy slowed down a lot, but people have really changed their habits like I haven’t seen.”

One change, he said, has been more people switching to Geico in order to lower their auto insurance rates.

Mr. Buffett, the owner of giant Berkshire Hathaway Inc., said Congress should set aside its partisan bickering in order to dealt with what he called an economic Pearl Harbor and that the government should send a clear message about the problems with the economy and what needs to be done to solve them.

“What’s required is a commander in chief that’s looked at like a commander in chief in time of war,” he said.

The markets have not responded well to the Obama administration’s plans for dealing with the recession because of a lack of specifics.

Despite the problems, Mr. Buffett said, “everything will be all right. We do have the greatest economic machine that’s ever been created.”

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