Dow Sinks Below 9000

Updated from 2:22 p.m. EDT

Stocks in New York were falling sharply again Thursday, and tight credit markets and pessimism about the financial sector sent the Dow Jones Industrial Average well below the 9000 mark.

The Dow, earlier up as much as 190 points, was recently down 359 points, or 3.9%, at 8878. It was one year ago today that the Dow closed at an all-time record high of 14,164. The S&P 500 was losing 46 points, or 4.6%, to 939, and the Nasdaq was off 47 points at 1693.

On Wednesday, markets sold off even after the Federal Reserve, along with central banks in Europe and Canada, orchestrated a coordinated cut in interest rates to help free up the credit markets.

As Thursday's session got underway, credit markets continued to tighten despite the rate cuts. Three-month Libor, a measure of the rate banks charge one another for large loans, was up 43 basis points to 4.75%. Overnight Libor was up 1.16 percentage points to 5.09%.

Commercial paper wasn't faring much better. The Fed reported that the market for company debt declined by $56.4 billion to $1.55 trillion for the week ended Oct. 8. Paper issued by financial institutions was down $42.4 billion to $641 billion, the Fed said.

Traders were looking ahead to a meeting of the Group of Seven industrial nations in Washington Friday, in hopes of seeing Treasury Secretary Henry Paulson and other finance ministers and central bankers work together to further shore up the financial sector. On Thursday, South Korea and Taiwan cut their interest rates.