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US stocks plunge for third straight session
(Agencies)
Updated: 2008-11-13 10:04
US Treasury Secretary Henry Paulson takes questions during a news conference at the Treasury Building in Washington November 12, 2008. [Agencies]  

The selling accelerated in the last hour of the day, as it has done in most sessions over the past two months.

"When there is a lot of volatility, especially on a big down day, people just decide they don't want to own stocks overnight," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "News doesn't drive this lower, fear does. Investors will back the next morning after they see where things settled."

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Late-day volatility has also been fed by hedge and mutual funds selling as investors withdraw money from the market.

The Dow shed 411.30, or 4.73 percent, to 8,282.66. It was the lowest close for the Dow since its 5 1/2-year low of 8,175.77 reached on Oct. 27.

According to the Dow Jones Wilshire 5000 index, Wednesday's paper losses amounted to about US$600 billion. By that measure, the stock market has shed US$9.1 trillion since the index's Oct. 9, 2007, peak.

The broader Standard & Poor's 500 index dropped 46.65, or 5.19 percent, to 852.30, and the Nasdaq composite index stumbled 81.69, or 5.17 percent, to 1,499.21.

The Russell 2000 index of smaller companies fell 29.49, or 6.11 percent, to 452.80.

Declining issues overwhelmed advancers on the New York Stock Exchange, where only 240 stocks rose while 2,869 fell. Consolidated volume came to 5.66 billion shares, up from 4.93 billion shares Tuesday.

Though Paulson's announcement marks a major shift in the original bailout plan and rattled investors, Wall Street analysts generally believe the US Treasury is now on the right path.

"That's really what they should have done originally," said King. "First and foremost, we have to make sure banks are going to survive and then we can worry about lending. This is the quickest and most efficient way to do that."

"Buying bad assets doesn't do that," he said.