WASHINGTON - Wall Street crossed another grim milestone Friday, with the Dow Jones Industrial Average falling below 8,000 for the first time in five years before recovering somewhat to close at 8,451.91, down 128 points to close out what was the worst week in the Dow's history.
In the first minutes of trading on the New York Stock Exchange, the Dow plunged almost 700 points. Later, it swung into postive territory, at one point more than 300 points above Thursday's close, before plunging again. It was the Dow's widest one-day trading range ever.
The day marked the eighth straight day of declines in U.S. markets, and followed a stock sell-off around the world, as Asian markets suffered steep losses. Japan's Nikkei fell another 9.6 percent at the close of trading to lose a quarter of its value this week. Hong Kong's exchange was down 7.2 percent and Australia's down 8.3 percent.
Asia's plunge migrated to Europe, where stocks slumped in early trading. The exchanges in Britain, France and Germany were off by a respective 5.4 percent, 6.1 percent and 7.9 percent. Austria temporarily halted trading after the stock exchange fell by more than 10 percent.
"There is no safe haven," said Evariste Lefeuvre, an economist with the French investment bank Netixis, told the BBC.
President Bush came before the cameras Friday morning in a bid to calm both nervous citizens and jittery markets.
"We are a prosperous nation with immense resources and a wide range of tools at our disposal," Bush said, seeking to reassure Americans who have seen their retirement savings shrink and wonder how safe their money really is in the bank.
Bush offered no new solutions, but reminded of the wide range of steps taken in recent weeks by the Federal Reserve and Treasury Department.
"Fellow citizens, we can solve this crisis, and we will," he said.
The drops over the past week of trading are nearing the faster two-day 25 percent drop in 1929 that is widely viewed as the trigger to the Great Depression. The Federal Reserve and Treasury have taken a number of aggressive steps to avoid repeating the same mistakes of the last century, but some analysts believe a more coordinated approach between developed nations is needed.
"One of the biggest lessons of the Great Depression is that countries only acted in self-interest and if countries act in self-interest the chance of failure is much higher,""said Jon Danielsson, an economist at the London School of Economics. "There is an increasing realization that the way out is for the large industrial nations to act with a single voice."
Finance ministers of the seven most industrialized nations - the so-called G-7 - meet in Washington today under great pressure to craft more than a communique and a photo opportunity.
Treasury Secretary Henry Paulson on Wednesday promised to call a meeting of the developed and rapidly developing emerging markets, who are sometimes called the Group of 20, or G-20. Traders around the world are hoping for more interest rate cuts and coordinated moves to shore up the global banking system.
Stock markets around the world have lost a quarter of their value or more as a global sell-off widens. While there is an increasing sense of urgency, there is still no agreement among world leaders over what strategies will work.
Britain's proposal to effectively nationalize some of its banks by taking equity stakes in them is now gaining credibility in the United States and around the world. But some economists say more needs to be done.
"The problem at the moment is central banks have been a bit behind the curve," said George Buckley, the chief UK economist for Deutsche Bank. "They haven't been in front of the markets and it feels like they are always playing catch up - and that's the problem."
In other developments Friday:
- The Federal Reserve Bank of New York holds a summit with Wall Street moguls to discuss ways to create a clearinghouse for settling credit-default swaps. These are insurance-like products, a $55 trillion market that is completely unregulated. The Fed fears system-wide risk if big players who issued these insurance-like swaps begin to fail, and believes some sort of orderly and transparent settlement mechanism is needed.
- Oil prices fell to $81.76 a barrel in early morning trading, down almost $5, and in the weeks ahead that is likely to mean lower gasoline prices for consumers. Already, the nationwide average for a gallon of unleaded gasoline stood at $3.35, down from $3.66 a month ago, according to the AAA Motor Club.
(Nissenbaum reported from Paris)
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