NEW YORK — Stock prices and the dollar plunged Monday — and oil and other commodities soared — on growing anxiety about the effect of the government’s proposed $700 billion rescue of the financial system.
The Dow Jones industrial average tumbled 372.75 points, or 3.3 percent, to 11,015.69, erasing the index’s 368-point gain Friday. The Standard & Poor’s 500 index lost 3.8 percent, and the Nasdaq composite index fell 4.2 percent.
It was the Dow’s sixth triple-digit increase or decrease in a row, and its fifth 350-point-plus move in six trading days.
Some investors who pulled money out of stocks poured it into commodities.
Oil futures shot up $16.37 a barrel to settle at $120.92 on the New York Mercantile Exchange after spiking as high as $130 in the last hour of trading. An index of 19 major commodities soared 3.9 percent.
The dollar posted its biggest decline on record against the nearly decade-old euro, and yields on Treasury bonds rose over concerns about the large amount of new debt that the government could take on to fund the bailout plan.
“Today, it’s all about the dollar getting crushed. Investors are back to looking at oil as a hedge,” said Phil Flynn, vice president and senior market analyst for Alaron Trading in Chicago.
“I think oil could go as high as $120, but this is not sustainable in the long run,” he said
Fadel Gheit, senior energy analyst for Oppenheimer, said, “People are seeing the bailout today as the fleecing of America. They are expecting the dollar to sink even more, and there is no place for the investment money to go except back into commodities and oil.”
Gheit added that the market was back to being driven by something other than traditional forces, at least in the short run.
“This is not oil responding to supply-and-demand fundamentals,” he said.
The euro surged to $1.480 from $1.447 late Friday. An index of the dollar’s value against other major currencies slid 2 percent.
The yield on the 30-year Treasury bond rose to 4.40 percent from 4.38 percent on Friday. The yield on the 10-year Treasury note rose to 3.85 percent from 3.81 percent.
After leading the stock market up Thursday and Friday, financial stocks led the way down Monday, with an S&P index of financial issues sinking 8.5 percent despite a ban imposed Friday by the Securities and Exchange Commission on “short selling” of financial stocks.
Shares of Morgan Stanley surged early in the session after the Wall Street firm announced that Japan’s largest bank would buy a 10 percent to 20 percent stake for as much as $8.4 billion to shore up Morgan’s capital. But the stock slid back with the rest of the market to end the day down slightly.
Goldman Sachs Group slid 6.9 percent the day after it and Morgan Stanley announced that they would become bank holding companies, subjecting them to more government regulation.