Dow Dips Below 8,000 To 5-Year Low

The Dow Jones industrial average closes below 8,000 points for the first time since March 2003.

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MELISSA BLOCK, host:

From NPR News this is All Things Considered. I'm Melissa Block.

ROBERT SIEGEL, host: And I'm Robert Siegel. Another bad day for stocks - they took a dive today. Major indexes dropped to levels we haven't seen since 2003. The Dow Jones Industrial Average was down 427 points, it finished below 8,000. NPR's Jim Zarroli has been watching the markets, as usual, and he joins me now. Jim, why did stocks fall so much today? What was it that investors were reacting to?

JIM ZARROLI: Well, once again, just a lot of bad news about the economy. I mean, it's really hard just to see a light at the end of the tunnel right now. We have the Commerce Department coming out with a report that said new housing fell four and a half percent last month. That is now the lowest level of new housing construction since they started keeping records in 1959. We also had a report saying consumer prices fell one percent in October. And even though a lot of that was because of energy prices, it was still a pretty sizable drop. You're starting to hear people now talk about deflation again, which is just a general drop in prices. It's, you know, what happens when there's a real big drop off in economic demand and it is, you know, a potentially scary and destabilizing thing.

SIEGEL: Were today's stock losses across the board, or were they concentrated in one area or a couple of areas?

ZARROLI: Well, some sectors were hit the hardest. There were big losses in auto stocks Ford down 24 percent, GM at its lowest level since 1942. You had all the auto executives on Capitol Hill today again asking for government bailout, but there's just a lot of skepticism about whether that bailout is going to happen. So that's hurting the auto stocks. You saw big drops again in financial stocks. Citigroup came out the other day, you may remember with this big plan to eliminate thousands of jobs.

SIEGEL: Over 50,000 jobs already.

ZARROLI: Right, 52,000 and 75,000 all together since the peak. It was supposed to - that was supposed to give investors confidence about where the company was going, cutting its expenses. Today, Citigroup fell to a 13 year low. So those are troubled sectors, but even the relatively healthy companies were hit hard today. General Electric, Cisco Systems, both of them lost five percent.

SIEGEL: The Federal Reserve today released the minutes of its October 29th meeting. What did the Fed have to say after all?

ZARROLI: These minutes are usually looked at very carefully by economists because they tell us what Fed policy makers think about where the economy is going. And the Fed - Fed officials are just a lot gloomier than they were just a few months ago. You know, there were predictions that growth could be negative for much of next year, unemployment could hit 7.6 percent. The Fed's projections, just in general, are a lot worse than they were. It is pretty clear that the Fed is willing to cut interest rates again, there was a reference to taking additional policy action. This is what the Fed does when it wants to get the economy growing. The problem is, the Federal fund's rate is already down to one percent, very low, and it really hasn't had so much - and much of an impact so far.

SIEGEL: And from what I saw, once again, the big drop in stocks today came at the very end of the day.

ZARROLI: Very end of the day, right after the release of the Fed minutes actually.

SIEGEL: Thank you, Jim.

ZARROLI: You're welcome.

SIEGEL: NPR's Jim Zarroli in New York.

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