This Day In Market History: Congress Rejects 2008 Bailout Package, Dow Crashes 7%

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened: On this day in 2008, The Dow Jones Industrial Average dropped nearly 7% after Congress rejected a $700 billion financial rescue package.

Where The Market Was: The Dow closed at 10,365.45 and the S&P 500 traded at 1,106.39.

What Else Was Going On In The World: In 2008, Steven Kazmierczak opened fire on Northern Illinois University campus, killing five and injuring twenty-one, before committing suicide. Illinois Governor Rod Blagojevich was arrested on charges of corruption, conspiracy to commit mail and wire fraud and solicitation of bribery. The average price of a new car was $27,958.

Dow’s Record Drop: A day after the Federal Deposit Insurance Corporation seized control of Wachovia, The House of Representatives rejected a $700 billion financial bailout package that many investors felt at the time was the last hope of avoiding a prolonged recession.

The bailout package split both Republican and Democrat votes in the House. The final vote included 149 Democrat votes in favor and 65 Republican votes in favor. However, 95 Democrats opposed the bailout, while 133 Republicans voted no.

After a weak start to the day, the Dow dropped 359 points in about five minutes starting at 1:43 p.m. and was down 673 points on the day. The VIX volatility index also hit an all-time high that afternoon.

When the dust settled on the trading day, the Dow finished down a record 777.68 points and the Nasdaq finished down 9.1% on the day.