(By Salman - iStockAnalyst Writer)
US Stocks fell sharply lower on Monday as credit crisis intensified and investors remained nervous, despite concerted effort by governments across the world. Dow finished below 10,000 for the first time since 2004 on concern the $700 dollar bailout package for troubled financial institutions would not stimulate economic growth. A sharp selloff in global equity markets also weighed heavily upon markets on Monday.

The Dow Jones Industrial Average tumbled 369.88 points, (-3.58%), to finish at 9,955.50. Earlier, Dow fell as much as 800 points or 7.74% to 9,525.32 The S&P 500 shrank 42.34 points (-3.85%), to 1,056.89. The Nasdaq Composite lost 84.43 points, (-4.34%), to end at 1,862.96. The indices recovered from day's low in late session on hopes that US Federal Reserve may soon cut benchmark interest rate.

On Monday, The MSCI World Index slumped 5.7%. European and Asian markets plummeted. At a meeting in Paris on Saturday, top E.U. leaders - French President Nicolas Sarkozy, German Chancellor Angela Merkel, British Prime Minister Gordon Brown and Italian Prime Minister Silvio Berlusconi -- failed to come up with a comprehensive pan-European bailout plan, along the lines of US. At a news conference following the meeting Saturday Sarkozy said "Each government will act in its own way, but will have to coordinate with others".

Global markets retreated sharply in Monday's trade. U.K. FTSE dropped 391.06 (-7.85%) to 4,589.19. The German DAX and French CAC subtracted 7.07% and 9.04%% respectively. Asian markets settled deep in the red. Tokyo's Nikkei 225 index fell 4.25%, to 10473.09, its lowest level in 4 1/2 years as banking stocks tumbled. Hong Kong's Hang Seng index dropped 4.97%. Indonesia's benchmark index sank 10%, its biggest one-day drop ever. Russia's Micex Index, denominated in ruble fell as much as 17%, before trading was halted. The dollar-denominated RTS index dropped 18.7%. Chinese, Australian, South Korean, Indian and Singaporean equity markets also retreated sharply. Monday's panic led to temporary trading halts in Russia, Brazil and Peru.

Money market still remains frozen and there has not been much improvement, despite several interventions by governments and central banks. According to the British Bankers' Association, the London interbank offered rate, or LIBOR, that banks charge each other for overnight dollar loans rose 37 basis points to 2.37% on Monday. The three-month rate stayed near the highest level since January. The Libor-OIS spread, the difference between the three-month dollar rate and the overnight indexed swap rate, rose to 298 basis points today, before retreating to 290 basis points.

Earlier, on Friday Figures released by US department of labor showed that employers slashed 159,000 jobs in the U.S. in September. Unemployment rate too remained steady at 6.1%. The figures further triggered recession fears among investors. The passage of bailout plan didn’t help much in restoring the investor confidence either as outlook for US economy remains gloomy.

Meanwhile, Citigroup Inc., Wells Fargo & Co. and Wachovia announced that they had reached a decision "in consultation with the Federal Reserve," to a "standstill of all formal litigation activity effective immediately." Earlier, Citigroup said it is suing Wachovia and Wells Fargo for alleged “bad faith breach of contract” and “tortuous interference” after the two banks agreed a $15.4bn merger last Thursday. Citi said further that it was seeking more than $20bn in compensation and $40bn in “punitive damages” from Wells Fargo for “tortious interference”, as well as damages from Wachovia for breach of contract.

Shares of Wells Fargo (WFC) plunged 2.7% to $33.64, Wachovia (WB) tumbled 6.9% to $5.78. Citigroup subtracted 5.1% to $17.41.

Bank of America (BAC) dropped 6.6% to $32.22 after it announced that it plans to pay a dividend of 32 cents a share in December, half of what it paid previously. The will sell up to $10 billion in common stock in order to achieve Tier 1 capital ratio. The bank said that it earned $1.18 billion, or 15 cents a share, a 68% fall. Analysts estimated the company to report earnings of 61 cents a share. Kenneth D. Lewis, chairman and chief executive officer said "We believe it is prudent to raise capital to very substantial levels in this uncertain environment.""These are the most difficult times for financial institutions that I have experienced in my 39 years in banking," he said further. Shares of Bank of America also fell after it reached an accord to settle claims brought by U.S. attorneys-general regarding risky loans originated by mortgage lender Countrywide Financial. According to reports, Bank of America may end up paying as much as $8.6 billion in settlement.

Bellwether Caterpillar Inc.'s (CAT) decreased 4%.

Energy stocks retreated as Crude Oil slipped. ConocoPhillips (COP) dropped 2%. Chevron Corp (CVX) shed 3.2%. Sunoco (SUN) fell 9.1%.

Mining giant, Alcoa Inc. (AA) dropped 5.9%.

Among transportation stocks, General Motors (GM) fell 5.78%. Airline stocks posted double digit declines.UAL Corp. (UAUA) plummeted 17.4%. Continental Airlines (CAL) and AMR Corp. (AMR) dropped 11.45% and 10.17% respectively.

Among technology stocks, eBay Inc (EBAY) dropped 5.5% it said it plans to slash 10% of its work force and spend about $1.3 billion on acquisitions. Oracle Corp (ORCL) lost 6.1% while Microsoft (MSFT) was down 5.36%.

Hewlett-Packard Co. (HPQ), IBM (IBM), Dell Inc. (DELL) , Cisco Systems (CSCO), Yahoo (YHOO) and Google (GOOG) finished in red while Apple Inc (AAPL) finished mildly positive.

Deutsche Bank downgraded Coca-Cola Co. (KO) to hold from buy.

On Monday, NYMEX Crude oil for November delivery settled at $87.81 per barrel, down $6.07, or 6.5%.



Disclosure: Author does not own any of the stocks discussed here.