U.S. Markets Fall, Dow Closes Below 10,000

October 6, 2008 5:16 p.m. EST

New York, NY (AHN) - U.S. markets plunged as banking concerns around the world and weakness in overseas markets had investors headed for the exits. However, a late rally on optimism of a Fed rate cut helped all three major indices pare a large portion of losses.

The optimism of a possible Federal Reserve Rate cut was sparked by talks of an emergency G8 meeting, proposed by France, where they would coordinate an interest rate cut by all global central banks.

The Dow Jones Industrial average traded lower by 800 points mid-way through the session, marking its largest one day point decline. However, the global rate cut speculation helped the Dow soar in the roughly 400 points in the last hour of trading, finishing the session down 370 points or 3.6 percent.

Even with the rally, the Dow Jones Industrial average was unable to close above the 10,000 barrier. Monday marks the first time since 2001 that the Dow has closed below 10,000.

The S&P 500 also participated in the late rally, finishing 42 points or 3.85 percent lower after being off more than 90 points earlier in the session.

Tech also participated in the late rally with the Nasdaq Composite finishing 84 points or 4.3 percent lower. The Nasdaq had traded down as much as 160 points.

Crude oil fell below $90 a barrel, to $87.81. The commodity was $6.07 lower on Monday over concerns of further weakening global demand.

With all of the banking concerns overseas heating up, the US Dollar index rallied 1.5 percent on Monday. Concerns over European banks flared up when the Germany government had to step in to prevent a collapse of mortgage lender Hypo Real Estate. Germany, Ireland and Greece all said they would guarantee bank deposits of their nation's bank.