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Cascading Crash: Dow Falls Almost 700

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CASCADING CRASH: DOW FALLS ALMOST 700

The Dow fell for a seventh straight session on Thursday as investors worried recent moves by authorities worldwide to thaw frozen credit markets might not be enough to avert a global recession.

An avalanche of selling at the close left the Dow below 8,600 for the first time since May 2003, and down almost 40 percent from its all-time closing high hit exactly one year ago. The Nasdaq and the S&P 500 each also fell to levels not seen in more than five years.

Bank and insurance stocks got hammered again, as the previous day's coordinated global interest-rate cuts and myriad other official actions to unfreeze money markets did little to boost confidence in the financial sector. Some traders said lifting the short sale ban may have contributed to the sell-off also.

What now?

There’s a run on the equity market, explains Zach Karabell, just like a run on the bank. I don’t think the fundamentals are crashing the stock market. I think there’s a sell off because stocks are the only liquid place to go for money on a daily basis.

The sellers are mutual funds, reveals Tim Seymour. In September they lost $72 billion and that makes them distressed sellers. They have to sell but if you don’t have to, I wouldn’t sell.

Investors are heading for the exits, adds Jon Najarian. It’s not what they should do but it’s certainly what’s going on. It’s clear that investors don’t trust the market. However, that presents opportunity. I was buying on the close, he adds. Remember, Buffett and Ackman have both been buyers.

I think it’s time for the U.S. government step in and become an open market buyer of stock market futures, says Joe Terranova. They need to stand there and take on the tape. We could see significant selling on Friday, he adds. I think we’re about to fall a lot farther.

What do you think? Tell us now!











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GM BREAKS BELOW $5

General Motors shares hit their lowest level in almost 60 years as the U.S. automaker said its year-to-date sales in Europe slid almost 2 percent and a ratings agency said it may cut the auto maker's long term credit rating.

American automakers find themselves in an extraordinarily difficult situation here, explains Dylan Ratigan. Without credit people can’t buy cars.

There’s also growing concern that GM can’t wait out this storm, adds Tim Seymour.


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BREAKING NEWS: WACHOVIA

In breaking news, Dylan Ratigan says Citigroup has broken off talks with Wells Fargo about the takeover of Wachovia. People close to Citi tell CNBC that the two sides couldn’t agree on assessing the riskier side of Wachovia’s loan portfolio.

Citigroup believes it has strong legal claims against Wachovia and Wells Fargo for breach of contract and plans to pursue its claims vigorously.

“I’m hearing that Citigroup believes that they will settle this case very soon, reveals CNBC’s Charlie Gasparino on Fast Money. And they think Wells Fargo will settle on Citi’s terms.”

I don’t think Citigroup is going to let it go, counters Sandler O’Neill Securities analyst Jeffrey Harte, also on Fast Money. But in financial services it’s very tough to wrest a hostile takeover, he adds.

If you put a gun to my head I’d say you’ll see Wells Fargo takeover Wachovia and Citigroup get a settlement. But whether Wells Fargo or Citi buys Wachovia someone is going to have to raise a lot of capital and that’s hard to do right now.

I think the tax payers win with the Wells Fargo deal, adds Jon Najarian. As far as I’m concerned Citi should walk away and shut up!

Read more: Citigroup Ends Talks With Wachovia


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UNCLE SAM TO BUY BANKS?

After struggling with little success to stem a financial panic, US authorities raised the possibility Thursday of taking part ownership in certain U.S. banks as an option for dealing with a severe global credit crisis, explains CNBC’s Hampton Pearson.

Such a move would follow similar action by British authorities, and would give the government special shares of the banks in exchange for helping boost badly needed capital in an effort to unclog credit markets.

"These capital injections are something that (Treasury) Secretary (Henry) Paulson is actively considering," White House spokeswoman Dana Perino said.

The concept of capital injections "was a part of the rescue package that the president supported," Perino added.



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Trader disclosure: On Oct.9, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns, (AAPL), (EOG), (EXM), (FTO), (FCX), (GS), (MA), (NOV), (POT), (X), (VLO); Jon Najarian Owns C preferred, WFC preferred, JPM preferred; Karabell Owns (MS), (JPM), (IBM), (AAPL), (GOOG), (FCX), (GLD), (CAT), (AGU); Seymour Owns (MER), (F), (BX) (GE)

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