NEW YORK — Volatility again swept the financial markets Monday as investors grew nervous about an amorphous government plan to buy $700 billion in banks’ mortgage debt. Stocks fell sharply, taking the Dow Jones industrials down more than 370 points, while investors sought safety in hard assets such as gold and oil, which at one point shot up more than $25 a barrel.
The dollar skidded lower, contributing to oil’s surge, while the credit markets were still uneasy but not showing the frantic trading they saw last week. Oil’s rise of $16.37 to a closing price $120.92 a barrel came as investors snapped up supplies to cover a contract that expired at the end of Monday’s session. Crude’s advance — it was up $25.45 at one point — showed the intensity of emotion in the market, and still-active contracts also rose sharply.
Gold, also in demand as a safe haven, rose $40.90 to $905.60.
While investors last week were relieved that federal authorities were constructing a plan to relieve the nation’s banks of their toxic assets, many weren’t waiting for the details to emerge before seeking safety. Wall Street is not sure how successful the plan might be in unfreezing credit markets.