Stocks free-fall as House knocks down bailout plan

Stocks plunge and Dow falls more than 777 at lows as financial bailout plan fails in House vote.

Wall Street's worst fears came to pass Monday, when the government's financial bailout plan failed in Congress and stocks plunged precipitously, hurtling the Dow Jones industrials down nearly 780 points in their largest one-day point drop ever.

The Dow index passed by far its previous record for a one-day drop, 684.81, set in the first trading day after the Sept. 11, 2001, terror attacks.

The $700 billion plan's failure means no one knows how the financial sector hobbled by hundreds of billions of dollars in bad mortgage bets will recover. While Wall Street didn't believe that the plan was a panacea, understanding that it would take months for its effects to be felt, most investors and analysts believed it was a start toward setting the economy right after a credit crisis that began more than a year ago and that has spread overseas.

Before trading began came word that Wachovia Corp., one of the biggest banks to struggle due to rising mortgage losses, was being rescued in a buyout by Citigroup Inc.
According to preliminary calculations, the Dow fell 777.68, or 6.98 percent, to 10,365.45. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.

Broader stock indicators also tumbled. The Standard & Poor's 500 index declined 106.85, or 8.81 percent, to 1,106.42.

The technology-heavy Nasdaq composite index fell 199.61, or 9.14 percent, to 1,983.73.