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Dow Slides To 11-Year Low

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK:

And I'm Melissa Block.

The stock market slid past a depressing milestone today. The Dow Jones Industrial Average closed below 7,000 for the first time since May 1st, 1997. The Dow is now down more than 50 percent from its peak, as bad financial news keep rattling investors.

NPR's Chris Arnold reports.

CHRIS ARNOLD: One of the triggers pushing the market lower today was an expanded government bailout for the giant insurance company AIG. The worry there is since AIG is now suffering even bigger losses, so could lots of other companies.

Mr. DAVID KOTOK (Cumberland Advisors, New Jersey): AIG is a barometer. And what the news says is we're not done with AIG. The problems are bigger.

ARNOLD: David Kotok is chairman and chief investment officer at Cumberland Advisors in New Jersey. He advises major pension funds with billions of dollars to invest. He says investors are continuing to hammer the stocks of companies with any ties to the financial industry. A loss announced by the European bank HSBC today helped send many other bank stocks lower. But Kotok says it's not just banks.

Mr. KOTOK: Other companies, General Electric, which reduced its dividend, half that company has been involved in finance very successfully for years. So the stock has been taken apart. It's $8 a share. And that process is being extended with a very broad brush.

ARNOLD: Just a month or so ago, as some investors were hopeful that the market was finding a bottom, the Dow was trading up and down in a pretty steady range. But over the past several weeks investors have been bailing out of stocks again. The Dow industrials fell nearly 12 percent in February. That's the worst one-month decline since 1933. The reason is a steady stream of worsening economic news that has experts making comparisons to the 1930s Depression.

Mr. NIGEL GAULT (Chief economist, IHS Global Insight): It's not the Great Depression, but we haven't seen anything like this since the Great Depression.

ARNOLD: Nigel Gault is chief U.S. economist at IHS Global Insight, a prominent forecasting firm. He says it's really shocking how quickly and sharply the economies of countries all over the world are slowing down. He says data over the past couple of months have just been much worse than expected. He thinks that all that could help put three to four million more people out of their jobs in the U.S.

Mr. GAULT: We haven't seen contractions like this in the working lifetimes of everybody who's involved in the markets so we're trying to analyze this. So we are absolutely in uncharted territory now.

ARNOLD: Gault says it's just really hard to know where the bottom is. Still, a lot of experts are reminding investors not to panic. David Kotok.

Mr. KOTOK: The world is not coming to an end and the greatness of the United States is not going to zero.

ARNOLD: Most economists think the government stimulus efforts will eventually get the U.S. economy growing again, and Kotok doesn't want to miss the market rebound. He says he's buying stocks for his granddaughter's college fund.

Mr. KOTOK: I have a two-and-half-year-old grandchild, and I'm going to buy the stock market. And the stock market is now available to me at half the price it was a year ago. I think that's a bargain. I think it'll help send her to college.

ARNOLD: So Kotok says people investing for the long term should stay in the market and just ride this out.

Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.