Dow Plunges On 20th Anniversary Of Black Monday Market Crash

Source : The Sunday Times, Oct 21, 2007

NEW YORK - THE Dow Jones Industrial Average dropped more than 360 points on the 20th anniversary of the Black Monday crash, as lacklustre corporate earnings, renewed credit concerns and rising oil prices spooked investors.

The major stock indexes on Friday turned in their worst week since July after construction equipment giant Caterpillar Inc soured investors' mood with a discouraging assessment of the United States economy.

Investor sentiment took another hit when Standard & Poor's downgraded a batch of residential mortgage-backed securities, adding to unease about credit quality. The reduction followed a similar move earlier in the week affecting more than 1,400 classes.

Oil prices also appeared on some investors' list of worries, after briefly moving above the psychological barrier of US$90 (S$132) per barrel for the first time.

The Dow Jones Industrial Average plummeted 4.05 per cent to 13,522.02, retreating from its Oct 9 high of above 14,000 points.

The broad market Standard & Poor's 500 index sank 3.92 per cent to 1,500.63 and the tech-heavy Nasdaq tumbled 2.87 per cent to 2,725.16.

Still, Friday's pullback paled in comparison to what investors had to contend with 20 years ago on Oct 19, 1987 - Black Monday - when the Dow plunged 23 per cent.

A decline of similar proportion today would mean a drop of some 3,100 points.

Friday's decline is the third-biggest point and percentage drop this year and the ninth- biggest point drop in the Dow since Black Monday. But there is a ray of hope, as many on Wall Street expect the Federal Reserve to respond with another rate cut this month.

Bond prices rallied in the past week as investors flocked to safety. The yield on the benchmark 10-year Treasury note, which moves inversely to the price, fell to 4.4 per cent from 4.5 per cent late on Thursday.-AP, AFP