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Ouch! Dow Dips Below 7,000

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By TIM PARADIS

The Associated Press

Published: March 3, 2009

NEW YORK - Investors' despair about financial companies and the recession has brought the Dow Jones industrial average to another unwanted milestone: its first drop below 7,000 in more than 11 years.

The market's slide on Monday, which took the Dow down 300 points, was nowhere near the largest it has seen since last fall, but the tumble below 7,000 was nonetheless painful. The credit crisis and recession have slashed more than half the average's value since it hit a record high over 14,000 in October 2007. Now many investors fear the market could take a long time to regain the lost 7,000.

"As bad as things are, they can still get worse - and get a lot worse," said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he thinks there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.

The "game-changer," he said, will be the housing market and whether it can stabilize.

According to preliminary calculations, the Dow fell 299.64, or 4.24 percent, to 6,763.29. The Dow last closed below 7,000 on May 1, 1997, and hadn't finished at this level since April 25, 1997.

Broader stock indicators also slid. The Standard & Poor's 500 index fell 34.27, or 4.7 percent, to 700.82.
Oil prices fell more than 10 percent, to $40.15 a barrel, Monday as investors worried that a weak economy will hurt demand.

Many market analysts look to Wall Street's performance in past bear periods to try to determine when stocks will hit bottom. In the past 60 years, the S&P 500 index bottomed about five months before a recession ended and nine months before corporate profits reached their low or unemployment hit its peak.

The market could recover before the economy starts picking up steam, but investors will need some sense that the worst is over - and that was hard to come by Monday.

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