Dow Off Nearly 700 Points Twice But Starts Modest Rebound

In one of the roughest days in recent memory on Wall Street, the Dow Jones industrials fell by almost nearly 700 points just as it became clear that the bailout proposal forged over the weekend would fail in the House. After recovering slightly, the Dow was again down by 700 points shortly before 3:30 p.m.

The proposal failed 228-205 as most Republican rejected as well as more than 90 Democrats.

Standard & Poor’s 500-stock index was down by 8 percent. 228-205.

President Bush told reporters that he plans to meet with his economic advisers this afternoon "to move forward." After his statement, the Dow regain about 100 points in a matter of minutes.

Michael M. Grynbaum of The New York Times is reporting:

The fear was most pronounced in the world’s credit markets, considered gauges of anxiety among investors. Yields on Treasuries plummeted after the House rejected the plan, with the one-month Treasury note yielding virtually zero.

Banks are charging enormous premiums for short-term financing; the difference between the cost of a three-month loan from a bank, and a three-month loan from the government, rose to the widest point since at least 1984. Other lending rates stayed high.

On Wall Street, the drops were sharp and swift, catching many investors and stock strategists on Wall Street by surprise. Many had expected the measure to be passed in the House, and lawmakers in Congress had suggested as much in comments earlier on Monday.