Selling decimates the markets; gold rallies, T-bill rates dive

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Calamity rules in markets today after the House, in a shocker, voted down the financial-system bailout bill.

Stocks have crumbled on Wall Street, with the Dow Jones industrials down 519 points, or 4.7%, to 10,623 at about 11:40 a.m. PDT.

Broader indexes are in far worse shape. The New York Stock Exchange composite has dived 7.2%; the Nasdaq composite is off 6.4%.

The indexes are, however, up from their worst levels just after the news flashed across TV screens that the bailout bill had failed. The Dow was down as much as 702 points at its low.

Still, the selling extends far beyond the U.S. stock market, as investors worldwide fear severe economic repercussions without a plan to bolster the banking system.

As of about 11:40 a.m. PDT:

--- Financial stocks are leading Wall Street lower. The Standard & Poor’s 500 index of major financial stocks has plummeted 9.8%. Just 162 stocks are up for the session on the New York Stock Exchange, while 3,029 are down.

--- In foreign trading, the Canadian stock market is down 7%; Mexico is off 6.1%. In Brazil trading was briefly halted after the market fell 10.2%. Trading has resumed and the market now is off 10.5%.

Earlier, European markets were hammered amid a rash of government rescues of ailing banks, including the Dutch-Belgian giant Fortis NV and British mortgage lender Bradford & Bingley. The average European blue-chip stock sank 5.1%.

--- Investors and traders are dumping nearly every commodity, expecting demand to dry up if the global economy contracts sharply. Crude oil futures are down $9.26 to $97.63 a barrel. The Reuters/Jefferies CRB index of 19 commodities is down 5%.

The only major commodity up for the day: gold, the classic haven. The metal is up $22.30 to $910.80 an ounce.

--- In another sign of the rush to safety, currency traders are bailing out of the British pound, the Brazilian real and most other currencies in favor of either the dollar or the Japanese yen. The euro is at $1.448, down from $1.461 on Friday.

--- Where’s the money going, besides gold? Treasury securities, again -- even as the Federal Reserve resorts to another huge infusion of cash into the financial system. The 3-month T-bill yield has tumbled to 0.51% from 0.85% on Friday. The 10-year T-note has fallen to 3.63% from 3.85%.