It seems the honeymoon might already be over. On Monday 09/22/08, stocks fell on concerns that the government plan to bailout financial companies, by buying up the bad mortgages and other assets weighing down their balance sheet, will not halt the downward spiral towards a worsening economy.

The plan which is estimated to cost at least $700 billion dollars caused the dollar to fall against major currencies. If implemented, the plan will drastically increase the liabilities of the U.S. government and that raises concerns amongst those who buy U.S. government bonds.

As a result, foreign investors are now worrying about whether the U.S. is the safest place for them to put their money.

With the drop in the dollar and the fact that Monday was an expiration day for oil futures, oil for November delivery, surged $16, closing at $109.37 on the futures markets. It was only last week that equity investors were celebrating oil falling below $95. This was the largest one day gain in oil prices and oil for October delivery which was expiring at the end of trading on Monday, actually spiked up $25.45 to $130 per barrel but then settled at $120.92, up $16.

The broad based decline in stocks caused steep losses across all the major indices, with the Dow Jones Industrial Averages losing 372.75 points (3.27%) to close at 11,015.69, Nasdaq lost 94.92 points (4.17%) to close at 2,178.98 while the S&P 500 index lost 47.99 points (3.82%) to close at 1,207.09.

 Tags: Stock Market  Dow Jones  Nasdaq  S&P 500