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Stock Markets Tumble; Round Two: Second McCain/Obama Debate; Supreme Court Decides Not to Hear Case of Troy Davis

Aired October 06, 2008 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

T.J. HOLMES, CNN ANCHOR: And hello there, Monday, October 6th.
The headlines, you have been looking at them for the past several minutes now. Dow stocks plunged today below that 10,000 mark for the first time in almost four years have we seen that on that board. Our financial experts, our analysts are all over this for us today.

Also, the presidential candidates getting ready for round two. We have a preview of tomorrow night's clash in Nashville.

Also, a charter bus carrying gamblers cartwheels off the road in northern California. Several people are dead. We'll be getting into that story this morning as well.

Good morning to you all. I'm T.J. Holmes, sitting in today for my friend Tony Harris.

And you are in the CNN NEWSROOM.

Well, world stocks tumbling fast, tumbling hard this morning, despite Washington's financial rescue plan. You know, that $700 billion plan that's supposed to make everybody feel better. Well, fear is still gripping the markets right now.

Dow blue chips been down triple digits all morning. Started out with a dip of almost 300 points immediately after opening, and it has plunged to 500 points at the time. You see it there down 449 points. And it's below that benchmark if you well, that 10,000 mark, something we haven't seen in quite some time.

It has been a year, though, a year ago this week, that the Dow closed at 14,000. You remember that. That was a week ago -- or a year ago this week. The Dow has lost almost a third of its value since that time.

Susan Lisovicz at the New York Stock Exchange for us with a look at what's prompting this sell-off. Our senior business correspondent, Ali Velshi, is with us as well. He's in New York with the big picture. There he is.

Hello to you both.

Susan, I will start with you. That $700 billion bailout package supposed to make everybody feel a little better, calm down the markets. That is not happening. SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Well, as many people pointed out to me on Friday, T.J., that now everybody can focus on the fundamentals. And the fundamentals are not good.

Remember, on Friday, we also got the jobs report where we saw a loss of 159,000. That was the worst, I believe, in five years. And it repeated a trend that we've seen every month this year, and in fact, you know, it's just getting worse there.

Having said that, of course, we've seen a global sell-off. And that's really what makes this scary.

People are losing confidence in their financial institutions overseas. And so something that started here is not confined here. As one economist said, this is like a cancer.

A trader I was talking to today said it's all emotion now. And so you try to stay calm in times like these, but the fact is, we're coming off the worst week on Wall Street since the aftermath of 9/11. And we're picking up right where it ended up on Friday.

London's FTSE right now, its main index, is down 7 percent. In Paris, the CAC is down 8 percent.

We're seeing government continue to try to prop up some troubled institutions there. The Federal Reserve taking steps this morning to increase the amount of liquidity it's pumping into the system to try to freeze these nearly-frozen credit markets.

And we continue to see a stampede out of stocks and into treasuries. The three-month T-Bill, which is considered just about the safest of all investments, we're seeing very, very low yields. Basically saying, look, we'll just put it there, and we don't even expect much of a return. We just want the safety of knowing that we'll get our principle back.

That's the kind of defensive, sort of hunkered down mentality there is right now. We've seen it before and we're right in the thick of it right now -- T.J.

HOLMES: And Ali, let me bring you in here. There's been plenty of people on TV, plenty of stuff out there to scare the crap out of people. They're already scared just watching what's going on in the markets.

This is certainly an issue right now of confidence and emotion, as she just talked about right there.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Right.

HOLMES: But I heard you last hour talking, you know what? People, just calm down. This happens.

VELSHI: Right. It's tough, T.J., because on one level, we really do want people to understand that this is serious. And it's serious because it's your retirement, your money. So you do need to actually take some very decisive action, and that may be consulting someone about whether you are invested in a way that's suitable for your age and your ability to handle risk.

On the other side, panic and fear don't help in environments like this. So I know we're getting e-mails and we're talking to people who are very fearful.

Look, there are ways to make adjustments to your portfolio that will help. Money that has been lost has been lost. You can sometimes make that up.

The perspective to keep here is that this bailout was not a Wall Street bailout in terms of stocks. It was not a stock market bailout. It was a financial institutions bailout that's supposed to trickle down to you so that your credit becomes more available. And we have to understand now the distinction between credit and equity.

Credit is what we've been talking about for the last three weeks. Equity is stocks. That's the money you own in companies.

Again, stocks are resilient and have always shown over time an ability to come back. So, if you are 15 or more years from retirement, panic and fear shouldn't be part of your vocabulary. The situation you have got here is opportunity.

If you are closer to retirement, then you do need to do a little bit more research, maybe speak to someone. Maybe go to money.com personal finance section and look at Money 101 and understand what your options are. But this is not -- you know, this is not people running for the doors on stock markets.

This is people trading it down. And the good news here is that we were down 586 points. The trend now seems to be loosening it up.

Now, as you and I know, T.J., you cannot make a trend from a few minutes or an hour or a day on the stock market. So, again, we bring you this for context to understand, it is serious, but panic and fear don't work in your favor right now.

HOLMES: All right.

We want to as well bring in our Gerri Willis, personal finance editor, who is with us as well, keeping an eye on this.

And Gerri, we talk about -- and maybe we putt too much emphasis on -- this 10,000 mark, this 10,000-point mark as some benchmark, as some glorious number. Oh, my goodness, we've gone below, so there's some gloom and doom attached to that. Not necessarily, I guess, if you will. Or how much should we be paying attention to that 10,000- point mark?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey there, T.J.

Yes, it's really a psychological threshold for investors, both professional and individual. It doesn't have any real meaning, but people think 10,000 is an important number. Let me tell you what you should be paying attention to today.

Think back about your own money, how you have it invested. What is your asset allocation? Are you invested in stocks? Are you invested in bonds? How much?

It's easy enough to do this. Go to morningstar.com, plug in the tickers for your mutual funds on there, a tool at Morningstar, and it will show you what your mutual fund is invested in. You can figure out exactly what you own. This should give you some breathing room here, information that will power you to do what you need to do.

Now, the big important thing to note today, how much you have in stocks, how much in bonds. How safe are you? Look at the asset allocation tool at CNNMoney.com. This will help you figure out how much you should have in each category. The more you have in bonds, typically the safer you have.

But I have to tell you, today is probably not the day to act, because the stock market is going down. If you jump in and sell your stocks now, sell your mutual funds now, you'll be getting a very low price indeed. You want to take a breath, sit back.

You know, T.J., I just want to tell you, the first time we came through 10,000 the other way, when stocks were rallying, this was 1999. Do you know what the top selling business book was that year?

HOLMES: What?

WILLIS: "Dow 36,000."

HOLMES: Yes.

WILLIS: And just is that is, you know, a complete misstatement, so some of these fears today might be wrong as well. This is what happens in a market like this. You know, people get nervous. They get worried. Even the professionals.

You have to make sure you stick to your knitting. Know what you're invested in. And take moves slowly but surely.

HOLMES: All right. Gerri, we appreciate that. That's certainly some good tips there.

Again, our Gerri Willis for us here. Susan Lisovicz at the stock exchange. And our Ali Velshi in New York keeping an eye on this as well.

Well, Ali, let me go back to this $700 billion bailout package. It's going to be a while before this thing actually starts to work, if you will, loosen up the credit markets like it's supposed to. But in the meantime, is it really not doing anything to boost the confidence, to make anybody feel better about what's happening, investors, Americans?

I mean, everybody, that confidence, that fear, those are the issues right now. The bill, can it help with that?

VELSHI: Yes, confidence had been beaten to a pulp right now. This is an economy, T.J., where we always thought we would do better on a few levels -- our wages, our homes, and the stock market. And over time, history has proved that to be the case.

And yow we're in an environment where your home isn't worth more, your investments are certainly not worth more. And you're not earning more in your salary, enough to overcome inflation.

So the three things that would cause you to say, let me take more credit and let me shop more are not happening. They're also the three things from stopping banks from comfortably lending to people.

So this bailout is supposed to loosen up some of the short-term lending that goes to companies and goes to banks. Those are companies in many cases that have already been distressed, so their stock prices aren't going to soar as a result of this bailout. They're going to hopefully not go down any further.

And as you said, it could be -- it's probably likely going to be after the election that we even start to feel the effect, because they're going to organize this $700 -- you know, this bailout committee, as it were. They're going to decide who gets the money.

They've got to figure out how to value these bad assets, these bad mortgages, which is something Wall Street hasn't successfully done in over a year. And then they start allocating money.

So, the only thing we can do here is hope that enough smart people understand that this should loosen credit up a little bit, and that should start to get things going. And ultimately, when credit is loosened, that means people can buy homes or take the loans that they need, and that will contribute to the economy.

The danger here, T.J., is when we had the stimulus checks, or you think back to 2001, where people were told after the attacks, go out and spend your money and support America. There isn't that sentiment amongst Americans right now.

Even if there's another stimulus package, which wouldn't happen until after the new year, people are not feeling like, I want to go out and do my part for the U.S. economy. What they're feeling is like, the U.S. economy hasn't done so well for me, so maybe I just want to sit on my money. And that's what the problem is. We're kind of at a standstill right now.

HOLMES: Well, yes. And you used the word "hope" there. That may be one of the best words and one of the best options for a lot of people.

VELSHI: Right.

HOLMES: We even did a story over the weekend about people actually praying for a better economy.

Let me bring Susan Lisovicz back in, who's at the New York Stock Exchange.

Susan, what do we have to look forward to here in a couple of months? We've got the holidays coming up. Is there conversation, is there a lot of talk right now about, my goodness, this is going to be a dreadful holiday season?

LISOVICZ: Well, it's going to be good for consumers, for those consumers who want to spend. There's no question about it.

You're seeing retailers get very proactive. In fact, Wal-Mart, a week or two ago, said it was going to cut prices on 10 of its top- selling toys. So retailers can be very ruthless, and this is sort of a Darwinian environment we're in right now, only the strong survive. We've seen it happen in the financial sector, and we're going to see it in retailers. They're really going to be tested.

But in the meantime, what are we watching? Well, we're going to be looking for any sign of loosening in the credit markets.

You know, I'm looking at something that Reuters put out, that on Wednesday, Fannie Mae is going to offer $2 billion in benchmark bills due later this year -- due next year, I should say. So basically, we're going to be looking for any loosening of the credit markets. That's one.

Two, is we're going to be continuing to monitor what's happening in the economy. We're going to start hearing from corporate America in their third quarterly earning statements. So that's something that the market will be paying attention to, and the fallout from that.

Third quarter was kind of rough, needless to say. And so we're going to see how both of that fare.

And as Ali pointed out, no question about it, this unprecedented legislation is going to take time to enact. I mean, no one should have expected that, you know, you just snap your fingers and everything is going to be magically gone, that everything will improve overnight. That's just not going to happen.

Unfortunately, we still have trading suspense with every day. And we've been hearing a lot of stress in Europe. And that's the problem, is that this is a contagion. And unfortunately, not only is it the precariousness of some financial institutions in Europe, it's the mindset which is so important in stock market movements. And right now the mindset is decisively negative.

HOLMES: All right. Susan Lisovicz for us, Gerri Willis. Ali Velshi here with us today.

Again, the markets not open that long, but we are down some almost 400 points. We've been down 500-plus at a point.

Thank you, three. Ali Velshi, again, Gerri Willis, Susan Lisovicz, we'll be checking in with you again. Thank you so much.

And stay right here with CNN. We're going to be all over this story, keeping an eye on the markets today. Talking about banks closing, Wall Street tumbling, protecting what's in your wallet, information you need to hear.

Stay here.

(COMMERCIAL BREAK)

HOLMES: Keeping an eye on the markets for you here on CNN, here in the NEWSROOM.

You can see there, down 426 points in morning trading. It'd been down 500-plus at one point, dropped 300 immediately at the open this morning. But right now we've been talking this morning. Confidence right now is not there for investors, for the American people, for the world markets as well. A lot of fear out there.

We will keep an eye on the markets and keep you abreast of what's happening with the markets all day here on CNN.

Also, we know what happened. Now Congress is trying to figure out why it happened and whose fault it is. They're looking for a fall guy in the whole financial crisis.

After swallowing that $700 billion bailout deal, lawmakers are a little upset right about now. Lehman Brothers' CEO Richard Fuld is first to feel the heat.

Here are live pictures to take you from Capitol Hill. This is Congressman Henry Waxman's committee. He says his committee wants to know what went wrong, who should be held accountable for the financial crisis.

Lehman, of course, that prestigious Wall Street investment firm, 158-year-old firm, collapsed three weeks ago today. Tomorrow, Waxman's will question execs from insurance giant AIG.

Well, Wachovia was in fear of going under. Thought this company was going to have to be bailed out or go bankrupt. Well, it doesn't sound like it's doing so well, but everybody is fighting over it.

Citi and Wells Fargo fighting in court now for the nation's fourth largest bank. Citi won round one in the court over the weekend. Wells Fargo, the second round. So we expect more back and forth, more appeals to follow.

Citi agreed to buy Wachovia's banking unit a week ago with government backing. But then four days later, Wells Fargo announced it wanted all of Wachovia and no taxpayer money would be needed. We do now know that court papers confirm the government was hours from seizing Wachovia if Wachovia did not agree to sell itself to Citi.

All right. We know your retirement counts. Is your nest egg -- you need to guard it like an overprotective mother.

Well, CNN Personal Finance Editor Gerri Willis can help you with that. Gerri, hello again. We're keeping up that box down there, keeping an eye on the markets today, but we want to talk about that 401(k). And that's probably the question you get more than anything else from people -- Is it safe? If not, how can I make it safe?

So, tell people, is their money OK in that 401(k)?

WILLIS: Yes. You know, people are asking, where is my money in the 401(k)? Really basic questions.

And I know you're getting your 401(k) statements in the mail. The balances are lower. But here's one thing you can take heart in. The money that you do have is safe.

If the company that manages it goes out of business, it doesn't matter. It's held in trust for you on your behalf. No one can have access to it, not even bankruptcy courts.

And your money's held separately from the institution that's managing it. It's not commingled with their money, their profits. It's just yours.

If the company that's in charge of your 401(k) goes bankrupt, your assets are still safe. You can still get your money.

Keep in mind, though, as we know, nobody guarantees your rate of return. So if you're seeing your money shrink in your 401(k), that is your risk. That's what your bear. Stocks are going down, your returns are going to go down, at least in the short term.

HOLMES: All right. The other question, 403(b)s are out there as well. These -- a lot of people may be not as familiar. They're similar to the 401(k)s, but same thing, are they safe as well?

WILLIS: Hey, this is a big thing, 403(b)s. You know, they're targeted towards folks who work in nonprofit companies, like hospitals, schools, government. And the protections are very similar to 401(k)s. But there are a couple of differences you should know about.

If you have what they call an independent 403(b), and this is one where you went out and negotiated your own deal with the financial company, found somebody to run your money for you, it's different. Here's how.

You don't have what they call a fiduciary. This is somebody that is responsible for making sure you have the right investment options to choose from and that fees are held in check.

Typically with a 401(k), somebody at your company is in charges of making sure those things are right. But sometimes with a 403(b), you don't have that backup. So that's the differences between the two. That's what you need to know.

A lot of fear out there about 403(b)s. Very similar to 401(k)s, you really don't have to worry. But there is that one critical difference.

HOLMES: OK. The last thing, let's go back to 401(k)s for a second.

People, like we talked about, you know they're safe. That money is yours. But still, you can incur some losses here. So how do you, I guess, make it less vulnerable to some of those losses?

WILLIS: Well, you know, the Dow is down dramatically this year. Similarly, people's 401(k) assets have been devastated. And sadly, there's no insurance against this investment loss, as I was saying.

That's what makes diversity, asset allocation more important than ever. Look at morningstar.com to get a sense of where your portfolio is. Make sure you don't have a lot of company stock, spread your risk out around a number of different investments.

Understand what you own. Information is power here.

And of course, if you have any questions, send them to us at toptips@cnn.com. We love to hear from you, we love to answer your questions right here every Friday.

HOLMES: And imagine just what some of those questions are these days, unfortunately. Like confidence and fear, those are a couple of words being thrown around a lot these days.

Gerri, we appreciate you. We'll be checking in with you again plenty today.

And you can follow your fortunes at CNNMoney.com. We've got all the day's market news, numbers, expert analysis, and everything else you may need.

Again, right here at CNN we are keeping an eye on the markets today. A very close eye.

The Dow, let's take a look, see where it is now, 414 points down today. And you can see that, for the first time in four years, we see that the Dow has dropped below that benchmark of 10,000.

We're keeping an eye on the markets. Stay here with us.

(COMMERCIAL BREAK)

HOLMES: Of course, there it is again, now at 400 points, roughly, the Dow is down today. We've been keeping an eye on this. Dropped almost 300 points immediately when the Dow opened, when the markets opened this morning, which was about two hours ago now.

Got all the way down to 500-plus points in the hole. And now it's holding steady, about 400 points down. But again, that other number right beneath, we see that the Dow is below 10,000 for the first time in four years.

We will continue to keep an eye on the marks today. And of course, the markets, the economy on everybody's minds. And what exactly would the candidates do? We've got debate night coming up, round two. That's tomorrow night. John McCain and Barack Obama go face to face again.

We have 29 days now until the election. Stakes certainly high.

And Senior Political Analyst Bill Schneider is live for us from Nashville, where that debate will be taking place.

Bill, thank you for being with us.

We're talking about the economy, we're talking about the markets and what's on everybody's minds. But the candidates seem to want to talk about something else. It's gotten a little nasty here in the past couple of days and over the weekend.

Is this just what happens? You've watched a lot of these elections. This is about the time when things start taking this turn?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Yes, they often do during the last month of a campaign. The candidates start throwing everything they've got at each other, trying to raise doubts about the other candidate's qualifications, character, credibility. And that's certainly happening now.

Barack Obama has built up a modest lead since the financial crisis broke. And the McCain campaign is worried about the economy. Everyone's worried about the economy, but it seems to be hurting him and helping Obama.

So, in part, there's some desire to change the subject, which is what Obama says McCain is trying to do, to talk about the risks that voters could be taking if they vote for Barack Obama. So that's part of campaign debate. But no question what's on the voters' minds, what's happening in the economy.

HOLMES: That's on the minds right now, trying to get the candidates to talk about it, if you will.

Negative campaigning, everyone says they hate it. Voters will tell you, I can't stand to see them attack each other. But historically, this stuff has worked. And that's why we continue to see negative campaign ads in election after election.

SCHNEIDER: It does often work. And you're right, the voters don't like it. And tomorrow night, in the debate here in Nashville -- I'm in the debate hall right now -- it's going to be a different kind of debate, because we are going to have an audience of uncommitted voters, not strong partisans.

These voters have been screened to be undecided. And they're the kinds of voter who don't cheer their candidate or boo the opponent. They're the kinds of voters who want a thoughtful, serious discussion. And they do not like personal attacks. So, if the candidates start going after each other personally, raising questions about each other's character and veracity, then you might find the audience showing its displeasure, sometimes vocally. It's happened before in town-hall-style debates.

HOLMES: And tell us who this type of format we expect to benefit. Who does this play to their strong suits to, to have this type of format besides just standing behind a podium and speaking directly to a moderator or an audience?

SCHNEIDER: Well, there's a broad generalization that you often hear that Barack Obama is at his best speaking at a rally to a big audience, like his acceptance speech at the convention, at the end of the convention in Denver, and that John McCain doesn't do very well in that format. He does better in face-to-face town hall meetings with voters, which he has done throughout his campaign. But those voters in his campaign town halls have often been supporters, people who are with him and who cheer him on. This audience will not be McCain supporters, they'll be undecided voters.

HOLMES: All right. Tomorrow night, Bill Schneider and the best political team on television will be there.

Bill, good to see you. We'll be talking to you again.

And you can tune in right here to see Bill Schneider and the rest of the best political team on television as McCain and Obama go at it tomorrow night. Again, that debate is tomorrow night. Tune into CNN, your home for politics.

Again, the candidates might be talking about other things right now. Everybody else right now seems to want to talk about that, the market, down, the economy. There's lack of confidence and there is fear, and that is what's driving some of the numbers.

We've seen the world marks down overnight in trading. And now the Dow down some 400 points now, and below the 10,000 mark for the first time in four years.

We're keeping an eye on the markets. The economy is issue #1.

You're in the NEWSROOM. Stay here.

(COMMERCIAL BREAK)

HOLMES: Well, can you believe, and can you remember? It was a year ago this week that the Dow hit 14,000. Today, under 10,000 for the first time in four years. You can see we are now at 438 points down for the day. And trading has been going on for the past two hours. A drop immediately, made a bit of a comeback, but now the losses have been as great at 500 plus points. And now we have been sitting around 400, 430 there as you're seeing right now. We continue to follow the markets and what's been happening in world markets, as well, as people still lack the confidence they need in this market to really make a rebound.

Our Allan Chernoff is with us, been covering business for us, been covering the markets and keeping an eye on this thing.

Allan, good to see you as always. Well, that $700 billion bailout package that was supposed to make people feel a little better, make Wall Street -- give them a little confidence. Not exactly happening.

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, hopefully it will down the road. But we can see, as we've been talking about, it is absolutely no silver bullet. It's going to take several weeks just to get that plan into place.

So on top of the crisis that we're confronting here, this morning we were hit with European bank worries. European governments stepping in to try to prop up the banking system over there. The losses right now in European stocks are even more severe than what we're seeing right there on the Dow board. So we've got concerns about a global recession kicking in. And that's one reason you're seeing investors just bailing out, all of a sudden deciding, my goodness, there's really no doubt that the economy is heading south in a serious way. And as a result, you see people just selling stocks very, very aggressively.

On the other side of trade, the issue is people afraid to step up to the plate and buy. There are plenty of sayings on Wall Street, don't try to catch falling knife, don't step in front of a runaway train. Whatever way you describe it, the bottom line is, as you said, T.J., it takes confidence to step in and buy stocks. That confidence is lacking. When buyers step away, that's when you see this kind of a freefall.

On the positive side, and there is maybe some positive to come here, this, as one market analyst described to me, is part of a bottoming process. I spoke with Peter Baker (ph) of (INAUDIBLE) who, by the way, has been very savvy on this market. And Peter said right now this market is entirely emotion, all emotion. But he said it's legitimate emotion, these are very scary times -- T.J.

HOLMES: You talk about falling knives and runaway trains, it's not good when you have to use those kind of analogies when we're talking about the market here.

Allan, what will be the signs? Just so you can tell me here quickly. What will be our first indications of us bottoming out? What will be the first signs? What do we need to look for to know that bleeding has at least stopped?

CHERNOFF: Right. Well, in the stock market itself, when you get these types of days where there is capitulation, and I can't tell you, nobody can, whether we're going to end up 500, down 1,000 points, or whether we'll rebound by the end of the day, but you certainly what you want to see in terms of some confidence returning is a bounce back in the market, but a bounce back with serious volume. Lots of trading activity pushing the market back up. We get a couple of days like that, that is something -- that's a pedestal upon which we can build. That's a foundation where we can begin to get some confidence back. That's for the stock market. Also, very important, the credit market. We've got to see banks willing to lend to each other. The Federal Reserve today being very aggressive, pumping much more money into the banking system. Also saying it's going to be giving banks interest on their required reserves, their cash reserves, that they leave with the central banks. That's going to help out the banking system. The Fed is really being aggressive here. At some point we've got to see the bankers step up to the plate and say, hey, the economy is not going to collapse worldwide. We can start lending money at least to each other, at least I can have confidence that I can lend to another bank, for three months, for six months, and I'm going to get my money back with interest.

HOLMES: All right. Allan Chernoff keeping an eye on things, as well as the rest of our money team today.

Allan, we appreciate you.

And again, we're keeping and eye on the market. You see there the Dow down right at 420 points right now. We will never be too far away from that story.

We do have another important story of interest coming in about the U.S. Supreme Court. Of course it's back in session today. But word we're getting about a controversial case, a death row case, of Troy Davis. We're going to head to Kelli Arena who is keeping an eye on things at the Supreme Court.

Kelli, this was one that a lot of people were keeping an eye, a very controversial case. Now we have word from the Supreme Court. What will they do?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well basically, they've denied to hear Troy Davis' appeal. Troy Davis has been on death row in Georgia since 1993 for killing a Savannah police officer. The issue here was whether the witness testimony was reliable. Several witnesses who had testified against him saying that he was indeed the killer recanted their testimony over the past several years. And so this obviously gained a lot of attention that this man should not be executed. He was actually scheduled to be executed several weeks ago in Georgia, but that was stayed while the lawyers made their appeal. And now the Supreme Court said, sorry, we're not going to hear this appeal, which means that Georgia can go forward now and schedule an execution.

This doesn't mean, though, that his lawyers may not bring up another issue on appeal. They're free to do that if they wish. But if they've run out of options, it's very likely that Troy Davis will be executed in the state of Georgia, despite the fact that several witnesses said, no, he's not the guy. What we said originally was wrong.

HOLMES: Very controversial case. And people who were sure in court, now have come out of court and said they're not so sure anymore.

ARENA: That's right.

HOLMES: So we will see what happens. Supreme Court not stepping in there.

Kelli Arena, thank you so much.

ARENA: You're welcome.

HOLMES: And again, stay with us here. We're keeping an eye as you see there at the bottom of your screen -- as we (INAUDIBLE) away -- but we're still keeping an eye on the markets. There it is for you. The big board, 435 points down on the Dow today. A lot of people forced right now to make some pretty tough choices during hard economic times.

You're in the NEWSROOM.

(COMMERCIAL BREAK)

HOLMES: The Dow Industrials down below that psychological safety net of 10,000 for the first time in four years. Down 440 points there on the day as you see. We're keeping an eye on this and other markets around the world as well as the country continues to lack the confidence in the markets even after that $700 billion bailout package was put in place.

We will turn to the race for the White House now. That race getting tighter, the rhetoric getting tougher and a lot louder. At a rally in Clearwater, Florida, today Republican VP candidate Sarah Palin took aim at Barack Obama on the issue of taxes.

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GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: In this campaign, in this election, I think the phoniest claim in a campaign that's been full of them is that Barack Obama is going to cut your taxes. I mean, think about it. He's built his whole career on dolling out tax money, first as a Chicago politician, and then raising taxes as a senator. He's voted 94 times to raise taxes, even on middle class every day working Americans making $42,000 a year -- voted to raise those taxes.

And he tried to waste $1 million dollars a day just on his requested earmarks. And now he's committed to almost a trillion dollars in new government spending, and yet he never bothers to explain where all that is going to come from, to pay for all of that. And doggone it, no one seems to be asking him how is he going to pay for the huge government growth that he wants. No one is asking him.

So you all -- just do the math. Either do the math, or just go with your gut. Either way you're going to come up with the same conclusion: Barack Obama is going to raise your taxes.

So, there's a pattern here of a left wing agenda that is packaged and prettied up to look like mainstream policies. And everybody knows that this country has got to be put back on the right track. But the problem with our opponent's agenda is that higher taxes and bigger governments and activist courts and retreat in war, that's not the right track for our country. That's another dead end. We have that plan to put our country back on the right track.

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HOLMES: Well, the Obama campaign says it would cut taxes for 95 percent of workers and their families.

Meanwhile, Barack Obama is out of the spotlight today. He's getting ready for tomorrow night's debate. But at a stop in Asheville, North Carolina, yesterday, Obama was focused on health care. He says it's time to change the entire system.

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SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Half of all personal bankruptcies are caused, in part, by medical bills. I know about the frustration of nearly 40 percent of small business owners who can't afford to insure their employees. Folks who work day and night but have to lay people off or shut their doors for good because of rising health care costs. I know the outrage we feel about 45 million Americans who don't have health insurance, kids who can't see a doctor when they're sick, parents cutting their pills in half and praying for the best, folks who wind up in the emergency room in the middle of the night because they've got nowhere else to turn.

But I also know this, that the situation we're in right now, that's not who we are. We're not a country where young women, like the one I met, should have to work that night shift after a full day of college and still not be able to pay medical bills for her sister who is ill. That's not right. It's not who we are. We're not a country where -- I met a man who had to file for bankruptcy after he had a stroke because he nearly faced $200,000 in medical costs that he couldn't afford and his insurance company didn't cover. That's not right. It's not who we are. That's not who we are, and that's not who we have to be.

Asheville, enough is enough. It is time for us to change our health care system. I understand that at this moment when we stand in the midst of the most serious economic crisis since the Great Depression, some might ask -- how can we afford to focus on health care? Major financial institutions have collapsed. Families across America are struggling. It's clear that the rescue package we passed in Congress isn't the end of what we need to do to fix our economy, it's just the beginning. Because contrary to what Senator McCain says, the fundamentals of our economy are still not strong.

We've got to address those fundamentals right now. And health care is one of those fundamentals. The question for you, Asheville, isn't how we can afford to focus on health care; the question is how can we afford not to?

(END VIDEO CLIP)

HOLMES: The McCain campaign is accusing Obama of deceitful attacks on McCain's health care plan. You can check out our Political Ticker for all the latest campaign news. Log onto CNNPolitics.com, your source for all things political.

Well, we'll turn to some more financial news now. The number of people going into those reversed mortgages has been doubling since 2001, expected to grow even more. These reversed mortgages allow people to pull some of that equity out of their home and get a big lump sum of cash.

Well CNN's Christine Romans looks at these reversed mortgages in this "Right on Your Money" segment.

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CHRISTINE ROMANS, CNN CORRESPONDENT: The AARP says nearly 60 percent of its members are having a harder time paying for basics like groceries and medicine. Personal finance expert, Eric Tyson, says that's why reversed mortgages are so appealing.

ERIC TYSON, CO-AUTHOR, "PERSONAL FINANCE FOR DUMMIES": They are filling a need in the marketplace because there are seniors who get to retirement, and their house-rich and cash poor.

ROMANS: Reverse mortgages let homeowners 62 and older tap a portion of their equity in monthly or lump sum payments. The loan does not have to be paid off until the home is sold.

TYSON: It can make the difference between being able to do repairs on the home or do some traveling or meet other out of pocket expenses that otherwise a senior might not be able to pay.

ROMANS: The government reports reverse mortgages more than doubled from 2001 to 2005. Thanks to the housing relief bill, they're expected to get even more popular. The new law caps origination fees and increases the maximum eligible home value for FHA insured reversed mortgages.

Still, Tyson warns these loans should be considered a last resort.

TYSON: If you end up only using the reverse mortgage for a few years and then selling the home fairly quickly, the effective interest rate that you're going to pay could easily be a double digit rate.

ROMANS: Christine Romans, CNN, New York.

(END VIDEOTAPE)

HOLMES: Well, the Dow, the economy, your confidence, a lot of people hoping all of them will come back and come back soon. But right now 450 points down for the Dow today. We're keeping a close eye on the markets and the economy today.

Stay with us.

(COMMERCIAL BREAK) HOLMES: We are keeping an eye on the markets today. Just had word across the wire that President Bush making comments today saying -- quote -- "it's going to take a while for the financial rescue plan to work." Well, a lot of people are seeing that today. It's going to take some time. 500 points down for the Dow is what we're seeing right there right now. Other markets across the world, other markets in this country, down today as well.

We want to check in with our Poppy Harlow who is over at the Nasdaq.

Poppy, we have been paying so much attention, and rightly so, still to the Dow. Certainly a benchmark everybody looks at and turns to. But still, what is happening at the Nasdaq, down as well?

POPPY HARLOW, CNNMONEY.COM: Yes, the reason we're here to show you -- this is the worst hit of all the major averages. The Nasdaq down more than 5.5 percent right now. That is worse than the S&P, worse than the Dow. It is down more than 30 percent since the beginning of this year.

The reason this index gets hit so hard when there is economic turmoil is because it has a lot of big tech companies, names like Microsoft, Oracle, Cisco. Those companies rely on the ability to borrow money to fund the growth in their businesses. And you have to think, T.J., some of the biggest clients of these big tech companies are financial firms. When you see a Lehman Brothers getting wiped off the map, that affects these companies. And a lot of people don't think of that.

Also want to mention that a lot of regional banks that we talk about -- their solvency and concern over the regional banks -- a lot of those regional banks are listed on this index.

And I want to also talk about something the vix index. It is -- basically it's a volatility index. It measures how people feel about the market. I'm looking at that out of the corner of my eye. That is up 18.3 percent. There are reports we're trying to confirm now that that is the highest reading on that index since 1989. The reading on the vix up 16 percent over the -- on the day so far. So that shows you just how concerned the investors are.

And then when you look at other stocks on the Nasdaq, like e- trade, it's getting hammered. It's down 13 percent today because retail investors, people like you and me that trade on our own, we're all sitting on our hands, we're not trading. That's hurting those companies.

So we look at the Dow as a measure of some of the biggest companies, but some of the biggest tech companies and some regional banks are traded here as well. And it is hit the worst so far this year -- T.J.

HOLMES: My goodness, Poppy. We've been reporting a lot about numbers that are the worst since so many years ago. It seems like -- and now you're talking about a volatility index as well. By all means we want to check back in with you possibly on that later, see just how bad it is historically.

Poppy Harlow at the Nasdaq for us. Thank you so much.

We want to turn from the storm on Wall Street to really, literally stormy weather. Now, Rob Marciano has been over in the weather center keeping an eye on things for us.

Rob, what do you have churning back there?

(WEATHER REPORT)

HOLMES: All right. Rob, we appreciate you this morning.

And again, we turn from storms there to the other storm we're watching on Wall Street still. Now we're back to about 486 points down on the day. The Dow down below 10,000 for the first time in years.

Stay here. We're all over this financial story.

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