Dow Falls Below 6800

Stocks broadly sold off on Monday amid fears that a recovery for the global economy and the banking system may still be a long way off, sending market benchmarks past another set of milestones. The Dow Jones Industrial Average declined 299.64 points, or 4.2%, to 6763.29, its lowest close since April 25, 1997. The stock measure has fallen four straight days and in 10 of the last 12 sessions, declining 14.8% in that span. The Dow is down 25% from its January 2 peak for this year and down 52.25% from its high of 14164.53 on Oct. 9, 2007. Markets on the Move [Markets Data Center] Track indexes and hot stocks, with roll over charting and headlines. Plus, comprehensive coverage of bonds, commodities and forex. Markets Data Center highlights: Most Actives, Gainers, Losers New Highs and Lows, Money Flows Intraday Futures and Currencies * Video: How Low Can We Go? All 30 Dow components dropped on Monday. Citigroup declined 20% to $1.20. General Electric sank 11% to fall under $8. Other big industrial companies like Boeing, Caterpillar and 3M swooned after a report from the Institute for Supply Management showed that the factory sector remains in dire condition. "Investors finally understand this recession will be deeper and longer, and the recovery will be shallow," said Joe Battipaglia, chief market strategist for the private client group at Stifel Nicolas. "And the government doesn't have a sense of any solution that might instill confidence." Mr. Battipaglia said that the market continues to take most of its clues from weakness in credit markets and the financial sector. While certain pockets of debt instruments have seen improvement since November, he notes it's only in the areas where the government has directly infused capital. The broad selloff pushed the Standard & Poor's 500 Index down 34.27 points, or 4.7%, to 700.82, its lowest close since Oct. 30, 1996. The index has fallen four days in a row and has shed 16.1% over the last 11 trading days. Its energy sector fell by 7.3% on Monday as crude-oil futures prices plunged 10%. Its basic-materials sector dropped 6.7% and its financial sector slid 6.3%. Doreen M. Mogavero, president and chief executive of the New York floor brokerage Mogavero, Lee & Co., said some participants are beginning to talk about a possible market bottom around 6000 for the Dow. In the meantime, many of her customers, including hedge funds, are holding off on sending her orders, waiting for greater detail on the new administration's economic policy and for key measures of economic activity to at least slow their long, painful slide. "This market will only stop when people run out of stock to sell," said Ms. Mogavero. [Dow Falls Below 6800] Bloomberg News Traders work on the floor of the New York Stock Exchange March 2. Ms. Mogavero and other traders in recent days have said that they believe some participants have been forced to sell to raise cash. But it seems such activity has never reached the critical mass that it did on many days in late 2008, when the market would often undergo massive intraday swings as big blocks of stock were unloaded. At the same time, individual investors are increasingly limiting their exposure to stocks. Verlin Abbott, 55 years old, a retired member of the military in Carmel, Ind., said that his portfolio has been almost entirely in cash since August 2008. It will stay that way, he said, until he sees "a confirmed market bottom," which he expects around 680 on the S&P 500, based on his analysis of historical patterns and trends. Mr. Abbott began averaging out of stocks in October 2007, when he held just 15% to 20% of his assets in cash, he said. Bijon Mishra, 60 years old, a financial-services consultant in New York City, manages two thirds of his portfolio, leaving the other third of his assets in the hands a money manager. Since last October, he has kept 80% of the IRA account he controls in Treasurys and bond funds, 5% in cash, and just 15% in stock funds. "This month, I had wanted to start averaging into stock funds, but I'll have to wait and see," Mr. Mishra said. "I want to wait for a firm turnaround, and be as safe as possible." He had expected the Dow industrials to turn around at the mid-to-low 7000 level, but "it hasn't -- I really don't know how much lower it's going to go," he said. Other market benchmarks were also weaker Monday. The Nasdaq Composite Index fell 54.99 points, or 4%, to 1322.85. The Chicago Board Options Exchange Volatility Index surged 15% to about 53.09. For more than five months since the meltdown of Lehman Brothers Holdings, the financial industry's bellwethers haven't been able to right themselves, even after government bailouts in every major industrialized economy, layoffs, and dividend cuts. While many traders acknowledge that those steps will help over the long term, they aren't yet willing to declare an end to the industry's crisis. The latest effort to prop up insurer American International Group, which posted a $61.7 billion loss Monday, also weighed on the financial sector, even though AIG's shares ended flat. The government's retooled rescue for the troubled firm deepened the feeling that efforts to repair ailing companies aren't working. "People are just abandoning the financial sector," said strategist Marc Pado, of the brokerage Cantor Fitzgerald. In the oil market, floor trader Raymond Carbone said rising recession fears have led to demand worries that are behind Monday's sharp losses in crude futures. He said that Monday's session has also been a prime example of oil's increasing propensity to take its cues from the direction of the stock market, especially the S&P 500. He's maintained a bullish position in crude lately because he believes the commodity has become cheap and supply constrained during its steep decline from highs around $145 a barrel last summer. But he said its sometimes been hard to hang on on days when crude gets swept along by speculative unwinding in tandem with the stock market. "I went home the other day and thought to myself, I just don't feel too good being long, as bullish as all the signs seem to be," he said. Light, sweet crude for April delivery fell $4.61 to settle at $40.15 a barrel on the New York Mercantile Exchange. Treasury prices rose as investors sought safe havens. The two-year note rose 8/32 to yield 0.899%. The 10-year note climbed 1-2/32 to yield 2.919%