OK of plan fails to defuse anxiety

NEW YORK – In the end, congressional approval of the government’s $700 billion financial rescue plan Friday did little to lift the financial markets from their growing dejection over the obstacles still facing the economy. Wall Street ended an intensely volatile week with the Dow Jones industrials falling 157 points and the major indexes all suffering big losses.

The credit markets remained stagnant, with no immediate signs of when lending and borrowing would return to levels even approaching normalcy.

Investors dumped stocks late in the session after a big intraday rally, repeating a defensive move seen throughout the yearlong market pullback. As lawmakers voted on the plan, which President Bush quickly signed into law, the Dow advanced more than 300 points. After it passed, the blue chips moved in and out of positive territory.

Investors had been eager for resolution on the government’s plan to buy up bad assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets. Trading across markets was turbulent throughout the week as investors tried to determine whether the plan would win approval and what effect it might have if implemented.

Wall Street’s decline Friday capped an extraordinary week. On Monday, the Dow tumbled 778 points after the House voted down the financial rescue plan. Then stocks enjoyed a snapback rally Tuesday as investors grew more confident that Washington would assemble some kind of aid; the Dow jumped 485 points. Stocks showed mostly modest moves Wednesday as investors waited for the Senate to take up the bill. Then a two-day pullback Thursday and Friday left stocks with huge losses for the week. The Dow lost 7.34 percent – its worst weekly loss since July 2002.

Meanwhile, the S&P 500 fell 10.8 percent for the week and the Nasdaq declined 9.38 percent.

The coming week marks the one-year anniversary of the peak in the Dow and the S&P 500, while the Nasdaq hit its peak in late October 2007. The Dow is down 27 percent from its high, while the S&P 500 is off 30 percent and the Nasdaq is down 32 percent.

The Dow Jones Wilshire 5000 Composite Index, which measures 5,000 U.S. based companies’ stocks, saw an estimated paper loss of about $1.5 trillion for the week, the worst weekly return since the week after trading resumed following the Sept. 11, 2001, terror attacks.

The Dow Jones industrial average ended the week down 817.75, or 7.35 percent, at 10,325.38. The Standard & Poor’s 500 index finished down 113.78, or 9.38 percent, at 1,099.23. The Nasdaq composite index ended the week down 235.99, or 10.81 percent, at 1,947.39.

The Russell 2000 index finished the week down 85.39, or 12.12 percent, at 619.40.

The Dow Jones Wilshire 5000 Composite Index – a free-float weighted index that measures 5,000 U.S.-based companies – ended at 11,294.13, down 1,052.90 points, at 8.53 percent, for the week. A year ago, the index was at 15,551.90.