Dow Falls Below 7,000; 1st Time Since 1997

The Dow Jones industrial average has plunged below 7,000 as investors grow increasingly pessimistic about the health of banks, and in turn the economy, around the world.

By: associated press | News Channel 7
Published: March 02, 2009

NEW YORK (AP) - The Dow Jones industrial average has plunged below 7,000 as investors grow increasingly pessimistic about the health of banks, and in turn the economy, around the world.

The Dow hadn't traded below 7,000 since Oct. 28, 1997, and last closed below that mark on May 2 of that year. The credit crisis and recession have now slashed half the average's value since it hit a record high over 14,000 in October 2007.

Investors are again fleeing stocks in response to bad news about financial companies. The government said it would give American International Group Inc. another $30 billion in loans, in addition to the $150 billion it has already given the insurer. AIG also said it lost $61.7 billion in the fourth quarter.

Meanwhile, HSBC PLC reported a 70 percent drop in 2008 profit and said it needs to raise $17.7 billion and cut 6,100 jobs.

The Dow is down 133 at 6,929. The Standard & Poor's 500 index is down 14 at 720, and the Nasdaq composite index is off 22 at 1,355.

Construction activity falls far more than expected

WASHINGTON (AP) - Construction spending plunged more than twice as much as expected in January, the fourth consecutive monthly decline. Nonresidential activity fell by the largest amount in 15 years.

The Commerce Department says overall construction spending dropped 3.3 percent in January with weakness in all major categories of the building industry. Wall Street economists surveyed by Thomson Reuters expected a 1.5 percent drop in spending.

Residential construction fell 2.9 percent and nonresidential activity dropped 4.3 percent, the biggest decline since January 1994.

Manufacturing index falls for 13th straight month

WASHINGTON (AP) - A private measure of the nation's manufacturing sector contracted for the 13th straight month in February, but at a slower pace than expected.

The Institute for Supply Management says its manufacturing index rose to 35.8 from 35.6 in January. Analysts had expected a drop to 33.8.

A reading below 50 indicates the sector is shrinking. The index has fallen steadily since August as the economy has deteriorated, hitting a 28-year low of 32.9 in December.

The new report shows manufacturers cutting jobs at a rapid pace while new orders are falling.