The credit crunch brought on by failing mortgages sent the entire economy into freefall as investment banks and other credit institutions began to fail during the quarter. As our session ended Sept. 30, 2008, massive volatility continued on Wall Street and globally after the U.S. House rejected the $700-billion bailout proposed by Treasury Secretary Paulson and the White House. The Dow posted its third-largest one-day gain in history as the quarter ended, but that was preceded by the index's largest one-day drop the day before.

Stunned players on Wall Street expected light volume until a decision is made on the bailout. “I'm not getting the sense that investors are going to be jumping in with both feet until there is some kind of resolution on the plan,” said James Maguire, an NYSE floor trader with Christopher J. Forbes. “If there's a no vote, we're going to see a lower overall drift in stocks. It will be a slow bleed.”

The Construction Index began to look a little frayed around the edges as the index fell to its lowest level since December 2005. The index settled at 1883.27, a loss of 579.47 points, or 23.53 percent. Declining issues easily out-muscled advancing issues at a 23-to-7 count.

Even though Vulcan Materials' second-quarter results fell on high energy and lower volumes, results still exceeded analysts' expectations. Vulcan shares rose this quarter by 14.72 points, or 24.62 percent, after VMC and other building materials companies got a boost when the Fed rescued national mortgage lenders Fannie Mae and Freddie Mac. For the quarter ended June 30, Vulcan said it earned $140.8 million, or $1.27 per share, versus earnings of $142 million, or $1.45 per share in the year-ago quarter. Revenues rose to $1.02 billion, from $878.8 million. Analysts surveyed by Thomson Financial expected Vulcan to earn $1.10 per share with revenues of $1.07 billion.

It was a bad quarter for steel: U.S. Steel and AK Steel were both top losers in the index. AK Steel had a banner second quarter as its results sailed past expectations. AK Steel posted net income of $145.2 million, or $1.29 per share, compared to net income of $109.9 million, or $0.98 per share earned in the year-ago quarter. Net sales were up to $2.2 billion from the previous year's $1.87 billion. Analysts expected AKS to earn $1.15 per share on revenues of $2.1 billion. However, the company said it expects lower shipments in the third quarter because of seasonally lower demand and a planned five-day shutdown of its Middletown mill. Shares may also have fallen on a stronger dollar. Soleil Securities analyst Charles Bradford also pointed to a big sale of AKS stock by hedge fund Harbinger Capital Partners. Harbinger owned about 10 percent of AKS but lowered its investment to about 4 percent. Also, a rumored sale to a Russian steelmaker never materialized. AK Steel fell 43.08 points, or 62.43 percent, and was the top percentage loser. AKS ended at 25.92.

U.S. Steel tumbled a whopping 107.17 points this trading session and was the top dollar loser. Goldman Sachs cut its rating on the steel sector to “neutral” from “attractive.” In a note to clients, the brokerage wrote, “Several of the typical risks to the steel cycle such as a rising US dollar, 'China fear' and sharply falling scrap prices have shaken investor confidence in sustainability of the steel cycle.” Even though Goldman Sachs maintained its “buy” rating on U.S. Steel, the brokerage took the company off its conviction buy list. U.S. Steel lost 58 percent and closed at 77.61.

Wells Fargo said it will take some charges from both the Fannie and Freddie bailout and the bankruptcy of Lehman Brothers, but otherwise is faring better than many other financial institutions in the mortgage lending crisis. Wells Fargo was in talks to buy Wachovia before that bank's failure and at the end of September announced that it will increase its share buyback program by 25 million shares, increasing an earlier repurchase program of 75 million shares.

Robert W. Baird analyst David George upped his rating on Wells Fargo to “neutral” from “underperform,” giving a nod to Wells Fargo's strong bottom line. “We believe the challenges in the credit markets and weak capital positions of competitors will continue to result in significant new business opportunities for Wells Fargo, and think the company will come out of the current credit cycle with an improved customer and employee base,” George wrote in a note to clients. Wells Fargo increased 13.78 points, or 58.02 percent, and was the top percentage gainer. Wells Fargo ended at 37.53.