The stock market had its steepest plunge since the crash of 1987 on Monday after the U.S. House of Representatives rejected the Bush administration’s $700 billion financial bailout plan.
The S&P 500 and Nasdaq lost 9% each and the Dow 7% It was the S&P’s biggest percentage drop since “Black Monday” in 1987, when it lost 20.5% in a single day.
Apple (NASDAQ: AAPL) shares plunged 18%, leading the Nasdaq to its biggest loss since the start of the tech downturn in 2000, after two analysts downgraded the stock on concern about slowing consumer spending. Apple shares ended the day at $105.26, down 48% from its 52-week high of $202.96.
The 228-205 House vote came even as evidence that a crisis that began with the failure of Lehman Brothers just two weeks ago was spreading rapidly. Just today, Wachovia (NYSE: WB) was taken over by Citigroup (NYSE: C), the seventh rescue or failure of a major U.S. financial firm this year, and Dutch-Belgian bank Fortis NV was among at least four European bailouts as the crisis threatened to spread to Europe.
Administration officials say the bailout won’t cost anywhere near its initial price tag, as taxpayers will likely recoup much of the cost of the rescue when markets eventually recover. But the magnitude of the financial crisis facing the U.S. has taken a back seat to public outrage over what is perceived as a Wall Street bailout and House GOP opposition to the bill on ideological grounds. Meanwhile, credit markets have frozen up at a rate not seen even in the aftermath of the 1987 crash, threatening the ability of companies that rely on short-term funding to function.
Other companies sporting double-digit percentage declines included Intel (NASDAQ: INTC), Google (NASDAQ: GOOG), eBay (NASDAQ: EBAY), Amazon (NASDAQ: AMZN), Yahoo (NASDAQ: YHOO), Citrix (NASDAQ: CTXS), Qualcomm (NASDAQ: QCOM), Research in Motion (NASDAQ: RIMM), Nvidia (NASDAQ: NVDA), Sun (NASDAQ: JAVA), Broadcom (NASDAQ: BRCM) and VMware (NYSE: VMW).
The Nasdaq plunged 199 to 1983, the S&P tumbled 106 to 1106, and the Dow plummeted 777 to 10,365. Volume rose to 7.03 billion shares on the NYSE, and 2.88 billion on the Nasdaq. Decliners led by a 33-2 margin on the NYSE, and 25-4 on the Nasdaq. Downside volume was 96% on the NYSE, and 97% on the Nasdaq. New highs-new lows were 17-1053 on the NYSE, and 21-687 on the Nasdaq.