Ares Destiny Blogger

A relentless sell-off in the stock market Monday blew through barriers that would have been unlikely just weeks ago, and investors warned there was no reason to believe buyers will return anytime soon.  The DJI average tanked below 7,000 at the opening bell and kept driving lower all day, finishing at 6,763 — a loss of nearly 300 points. Each of the 30 stocks in the index lost value for the day.  And the S&P 500 stock index, a much broader measure of the market’s health, dipped below the expressively vital 700 level before closing just above it. It hadn’t traded below 700 in view of the fact that October 1996.  Investors were worried anew about the stability of the financial logic after insurer American International Group posted a staggering $62 billion loss for the fourth quarter, the largest in U.S. corporate history — and accepted an expanded bailout from the government.  “As terrible as things are, they can still get worse, and get a lot worse,” said Bill Strazzullo, chief market strategist for Bell Curve Trading, who said he believes the Dow force fall to 5,000 and the S&P to 500.  Its last close below 7,000 was May 1, 1997 — a time when the market was barreling to one record high after another because of the boom in equipment stocks, but often suffered huge drops as investors worried about inflation and rising interest rates.  This time around, Wall Street analysts seem to believe that a stock market recovery will first require signs of health among financial companies, and on Monday those signs seemed further away than ever.  AIG, whose reach is so vast that the government warns letting it fail would cripple the very world financial logic, will get another $30 billion in loans on top of the $150 billion already invested by the government.  The banking sector helped drive the market lower. Citigroup stock lost 20 percent of its value and fell to a paltry $1.20 per share. HSBC lost 19 percent. Bank of America lost 8 percent.  While the root of the problem for the financial firms is the terrible bets they made on mortgages and mortgage-backed securities, now the recession is exacerbating their problems, forcing job cuts.  “The economy certainly has deteriorated in view of the fact that November,” said Sean Simko, head of fixed income management at SEI Investments. “It’s just the fact that we haven’t seen signs of improving or stabilizing, per se, which is adding to the morass of the market.”