Dow drops more than 360 points

This is off The New York Times:

Stocks plunged today to their lowest level in a month, with the Dow Jones industrials dropping more than 360 points.

The steep decline culminates a week in which the market was hit repeatedly with poor earnings reports. The trend did not let up today: lowered profits and reduced forecasts from Wachovia Bank and Caterpillar, the big machinery manufacturer, set off the downturn soon after the opening bell.

The Dow, which recorded its worst week since late July, has fallen more than 4 percent from the all-time high it set just 10 days ago. The benchmark index closed at 13,522.02, down 366.94, or 2.6 percent. All 30 of the Dow’s components declined. The Standard & Poor’s 500-stock index and the Nasdaq composite were showing comparable declines.

It was the worst one-day loss for the Dow since Aug. 9, when the average closed down 387.18.

“We’re like a bunch of adolescents right now,” said Jerry Webman, chief economist at OppenheimerFunds, of his fellow investors. “Last week we got some good news and we’re happy. Now we’re all sullen and down in the dumps.”

And I would say that the reason for this big Dow drop can be found here:

Wachovia reported a 10 percent decline in third-quarter income after writing down $1.3 billion in loans and investments related to mortgage-backed securities.

Wachovia’s report came after Bank of America’s announcement on Thursday that its third-quarter earnings plunged 32 percent, including heavy losses in its consumer banking division, the largest among the big brokerage firms. Bank of America joined with Citigroup and JPMorgan Chase earlier this week in creating an ambitious fund intended to stave off further problems in beleaguered credit markets, though investors have appeared ambivalent on the idea.

Again, we go back to the mortgage meltdown, where we're seeing increases in home forclosures as Americans are unable to pay their adjustable rate mortgages. The mess is now snowballing into the big banks, as they are trying to figure out how much they've lost packaging these loans into worthless securities. And I don't think that the banks fully understand this mess, or have revealed the extent of their losses as this mortgage mess slowly moves through the U.S. economy. There will be more uncertainty in the future.