All eyes are on Wall Street today after the Dow industrials suffered their worst one-day point loss ever: A 777-point drop sparked by lawmakers' rejection of the proposed $700 billion market bailout.

"We've completely decimated confidence in the markets," James Dunigan of Philadelphia's PNC Wealth Management said after the Dow lost 777.68 points yesterday to close at 10,365.45.

State Treasurer Tim Cahill said capital markets are "totally frozen" and Massachusetts has lost access to short-term credit lines it relies on to pay its bills. But he was still confident the state would be able to make an upcoming $1.3 billion local aid payment.

The blue chips tumbled after the U.S. House voted 228-205 to deep- six a massive proposed government bailout of credit markets.

The Dow's decline surpassed a previous one-day record of 684.81 points set on Sept. 17, 2001, in the 9/11 terror attacks' wake.

On a percentage basis, the Dow yesterday fell 6.98 percent, the 17th worst one-day drop ever.

"Markets are pricing in a total calamity in the U.S. financial sector," said Rob Lutts of Salem-based Cabot Money Management. "There were expectations that the government would serve as a backstop to the financial-services crisis. But now it looks like that won't happen."

Lawmakers rejected a White House-backed plan to buy up $700 billion of bad mortgages from Wall Street.

Championed by U.S. Treasury Secretary Henry Paulson and Federal Reserve chief Ben Bernanke, the proposal aimed to give markets fresh capital while removing dud loans from corporate balance sheets.

The Dow had been off about 250 points just prior to the vote, but fell like a stone after lawmakers nixed the bailout around 2 p.m.

Adding to Wall Street's woes were fears that the burgeoning credit crisis had engulfed two more victims.

Federal regulators yesterday engineered a $2.2 billion sale of Wachovia Corp.'s banking operations to Citigroup, while Sovereign Bank saw its shares drop 72 percent.

However, yesterday's meltdown hit far more than just financial- services firms.

The broad Standard & Poor's 500 index fell more than 100 points - its worst one-day loss since the October 1987 crash. The drop eliminated more than $800 billion in shareholder wealth.

"Stocks in all industries are down," Lutts said. "People are saying: `I don't want to hold any stocks today.' "

Herald news services contributed to this report.

Originally published by By JERRY KRONENBERG.

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