NEW YORK – Fear swept across the financial markets Monday, sending the Dow Jones industrials down as much as 705 points, after the financial bailout package failed the House.
As the vote was shown on TV, stocks plunged and and investors fled to the safety of the credit markets, worrying that the financial system would keep sinking under the weight of failed mortgage debt.
"Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group. "This isn't a market for the timid."
While investors had some worries that the vote would be close, many investors appeared to believe it would ultimately pass.
The markets were highly volatile, with the Dow regaining ground then falling backing again, trading down 577.37, or 5.18 percent, to 10,565.76.
Broader stock indicators also tumbled. The Standard & Poor's 500 index declined 79.35, or 6.54 percent, to 1,133.92, and the Nasdaq composite index fell 146.72, or 6.72 percent, to 2,036.62.
The Federal Reserve declined to comment on the market's decline.
With Wall Street in turmoil, the yield on the 3-month Treasury bill fell to 0.32 percent from 0.87 percent on Friday. That showed that investors were prepared to get meager returns on an investment as long as it was secure.
Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets.
"Things are dying and breaking apart while they sit there and vote on this thing," he said.