New York In the end, congressional approval of the government's $700 billion financial rescue plan Friday did little to lift the financial markets from their growing dejection over the obstacles still facing the economy. Wall Street ended an intensely volatile week with the Dow Jones industrials falling 157 points and the major indexes all suffering big losses.
The credit markets remained stagnant, with no immediate signs of when lending and borrowing would return to levels even approaching normalcy.
Investors dumped stocks late in the session after a big intraday rally, repeating a defensive move seen throughout the yearlong market pullback. As lawmakers voted on the plan, which President Bush quickly signed into law, the Dow advanced more than 300 points. After it passed, the blue chips moved in and out of positive territory.
Investors had been anxious for resolution on the government's plan to buy up bad assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets. Trading across markets was turbulent throughout the week as investors tried to determine whether the plan would win approval and what effect it might have if implemented. On Monday, the House's rejection took Wall Street and Capitol Hill by surprise and handed stocks their biggest losses in years.
The Senate subsequently passed a sweetened version of the plan that added tax breaks and raised the limit on federal deposit insurance from $100,000 to $250,000.
But Wall Street has come to realize passage of the plan is not a quick fix.
"We're three weeks into a severe credit crunch, and it's causing untold economic damage to the country," said Hank Smith, chief investment officer at Haverford Investments. He said that while the bill's passage would help Wall Street, the broader effects of the paralysis in the credit markets have yet to emerge.
"It's fairly reasonable to assume that this should help unfreeze the credit markets but what we don't know is what's happened so far. How much of a dent has it put into the economy?"
The Dow fell 157.47, or 1.50 percent, to 10,325.38 after rising more than 310 points just after the House vote began.
Broader stock indicators also ended lower. The Standard & Poor's 500 index fell 15.05, or 1.35 percent, to 1,099.23, and the Nasdaq composite index fell 29.33, or 1.48 percent, to 1,947.39.
Wall Street's decline Friday capped an extraordinary week. On Monday, the Dow tumbled 778 points after the House voted down the financial rescue plan. Then stocks enjoyed a rally Tuesday as investors grew more confident that Washington would assemble some kind of aid; the Dow jumped 485 points. Stocks showed mostly modest moves Wednesday as investors waited for the Senate to take up the bill.
The two-day pullback Thursday and Friday left stocks with huge losses for the week. The Dow lost 7.34 percent - its worst weekly loss since July 2002.
The S&P 500 fell 10.8 percent for the week and the Nasdaq declined 9.38 percent.