Dow slides below 7,000 for first time in twelve years

Dow slides below 7,000 for first time in twelve years
The Dow Jones below 7,000 for the first time in twelve years on Monday after American International Group posted the largest quarterly loss in US corporate history.

By Telegraph Staff
Last Updated: 3:59PM GMT 02 Mar 2009

Dow Jones Industrial Average slides below 7,000 for first time in twelve years.

The blue chip index fell 144.8 - or 2pc - to 6918 points within minutes of opening after AIG reported a $61.7bn (£44bn) fourth-quarter loss and the US government said it would give the insurer another $30bn in loans. This is in addition to the $150bn it has already given the ailing insurer.

Wall Street's concerns about how governments around the world will fix the financial system and global economy have sent stocks to their lowest levels in 12 years.

The Dow Jones industrial average has dropped for six consecutive months, and is worth less than half of its October 2007 record high of 14,164.53.

Investors were also worried about European financial companies. HSBC, Europe's largest bank by market value, on Monday reported a 70pc drop in 2008 net profit and said it needs to raise £12.5bn and cut 6,100 jobs in the US.

HSBC and general gloom about banks and the global economy dragged down European stocks. Markets in London, Frankfurt and Paris was down between 2pc and 3.5pc just after trading started in New York.

Billionaire Warren Buffett wrote in his annual letter to investors on Saturday that he is sure "the economy will be in shambles throughout 2009 — and, for that matter, probably well beyond — but that conclusion does not tell us whether the stock market will rise or fall".

"As bad as things are, they can still get worse, and get a lot worse," Bill Strazzullo, chief market strategist for Bell Curve Trading, told AP.

Mr Strazzullo said he believes there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.

http://www.telegraph.co.uk/finance/markets/4927959/Dow-slides-below-7000-for-first-time-in-twelve-years.html