UPDATED: Dow Going Down: Closing Number is Down 513
More bad news on the economic front. The Dow is going south:
U.S. stocks plunged, with the Dow losing more than 350 points Thursday, as investors remain on edge about the global economy.
[UPDATE: It's closing number was down 513:
The only good thing to say about today's stock market is that it's finally over. The Dow fell a staggering 513 points, or 4.3%, to close at 11,384. It's the worst point drop since December 2008 and the worst percentage drop since February 2009, reports MarketWatch. The S&P 500 plunged 60, or nearly 5%, and NASDAQ dropped 137, about 5%. All three major indexes are now in the red for the year.]
There’s “total fear” in the market right now, said Bob Doll, chief equity strategist at BlackRock.
The Dow Jones industrial average (INDU) dropped 350 points, or 2.5%, with Alcoa (AA, Fortune 500), Caterpillar (CAT, Fortune 500) and Bank of America (BAC, Fortune 500) among the biggest drags on the blue chip index. The only gainer was Kraft (KFT, Fortune 500), following news that the company plans to split itself in two.
The S&P 500 (SPX) was down a staggering 41 points, or 3.2%, with only nine of the index’s components showing modest gains.
The Nasdaq (COMP) lost 91 points, or 3.4%. Some of the better performing tech stocks, Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and Netflix (NFLX) were all down between 2% and 3%.
Stocks plunged, driving the Dow Jones Industrial Average down more than 300 points, as investors appeared to lose faith in the ability of the world’s policy makers to revive the global economy and stave off a rolling debt crisis in Europe.
The Dow slumped as much as 372.52 points, or 3.1%, to a low of 11523.92 in midday action, erasing all its gains for 2011. It recently was down 293, at 11611, a decline of 2.4%. The slump of the past few weeks has driven the Dow down almost 10% from its May intraday highs–a decline that would be classified as a correction.
The Standard & Poor’s 500-stock index fell 34 points, or 2.7%, to 1227 in recent action. The S&P recently was in correction territory on an intraday basis, having fallen more than 10% since May. The Nasdaq Composite slumped 74 points, or 2.8%, to 2618.
Investors across the globe have been buffeted by economic and political turmoil in recent days. In the U.S., fears have turned from worries about a possible default by the U.S. government to a weakening economic outlook. A string of data have pointed to a slowing of the recovery and investors are now bracing for the closely watched nonfarm payroll report on Friday. In Europe, leaders are struggling to contain a growing debt crisis. Investors are increasingly worried that troubles are spreading to Italy and Spain, driving down stocks across the region and sending borrowing costs of peripheral nations soaring.
In the U.S., all but one Dow stock was lower as investors sold across the board. All of the S&P 500 sectors were in the red and just 12 of the 500 stocks were up.
“This is a fear-driven market. We’re in a mini-free fall. It’s not a Black Monday, or Black Thursday, but it’s in pretty bad shape–all the big stocks are being liquidated,” said Christian Thwaites, president and chief executive at Sentinel Investments.
Gold and silver, which had been up on the day, reversed course as investors sold the metals to meet stock-based margin calls, traders said. If investors have purchased stocks with borrowed money, they often have to front more cash if the price of those shares fall, known as a margin call.
The drop in the U.S. came after a one-day respite Wednesday from nearly two weeks of declines.
Before trading opened on Wall Street, the Labor Department announced that the number of people applying for unemployment benefits last week fell slightly from the week before. But the report, following a raft of disappointing economic data in recent days, was taken by many gloomy investors to indicate only that the stalled job market is not improving.
Some investors also are selling to protect their portfolios before Friday’s monthly announcement of unemployment data.
“It’s almost a very simplistic thing here, there has just been indiscriminate selling,” said Michael Purves, the chief strategist at BCG Financial. “Markets work in strange and mysterious ways –- and sometimes it takes while for routs like this to get going.”
Investors have been moving into perceived safe havens such as gold, Treasury bonds and the Swiss and Japanese currencies. The value of the yen was down Thursday about 3% against the dollar after Japan’s central bank moved overnight to sell yen to protect the country’s export economy. Switzerland’s central bank took a similar step Wednesday to limit the value of the Swiss franc.
21 Responses to “UPDATED: Dow Going Down: Closing Number is Down 513”
The confidence fairy strikes again.
[sarcasm]More austerity is needed right away, time to cut off those lazy old geezers from their Social Security Checks and Medicare.[/sarcasm]
I’m glad the debt ceiling bill got passed, if for nothing else then so that news articles couldn’t blame the hundreds of points that the DOW has lost since August 2 on it like they did the hundreds of points it lost before August 2.
S&P was expecting $4 trillion in spending reduction, didn’t see it, so many expect S&P to downgrade the US’s credit rating. (S&P expects more than $4 trillion in cuts to stabilize annual debt. The total debt is a separate issue. Read on.)
S&P wanted $4 trillion in cuts to hold US federal debt to 100% of GNP. However, with the debt limit increase, it’s now beyond that.
And no doubt there’s a no-confidence vote on any new commission. Look at what the Dems did after the previous commission (which they pushed!) submitted its recommendations.
“S&P was expecting $4 trillion in spending reduction, didn’t see it, so many expect S&P to downgrade the US’s credit rating.”
The guy who makes the ratings for S&P was on the radio yesterday saying something very different. They’re not downgrading the US’s credit rating because we didn’t cut enough. They downgraded us because we cut so much that the world is worried about our economy taking another tumble.
What was cut? I thought the agreement was to wait until after the election to even start the discussion.
“What was cut? I thought the agreement was to wait until after the election to even start the discussion.”
$900B has been decided, if my understanding is correct (it might not be) — “defense and non-defense” — whatever that means. And Congress has to act by Dec 23 on figuring out where the remaining $1.5T will come from, or automatic cuts go into effect. The guy was very clear (I’ll go rooting around to see if I can find his name) that it’s not his job to pass judgment on whether what a government or company does is “good” or “bad”, just whether or not it is likely to be able to pay off its debts. He said the cuts in the bill make it less likely, so there is a possibility of downgrade, but it will all be based on data, not on the politics of whether the US did the right thing or not.
**Edited to indicate $900 billion, which I had written as million, which was incorrect.
Dow down 512 points, the confidence fairy is singing.
Listen to the beautiful music.
Good thing I have that apple vendor job lined up.
Even The Economist is saying that unless you are a Keynesian, the US would be better off without you having an opinion.
Contractionary politics cause contractions. It’s almost as if we even have to ignore the meaning of words in order to give the right-wing ideologues a pass for their unerring, pathetically misdirected sense of purpose and well-meaning.
roro
Not saying that what you heard is wrong but it doesn’t make much sense. Yes it is 900 billion over the next 10 years but that’s 2 percent of the planned $45 trillion in spending over that period. Short term, it is even less. $26 billion over two year or about 0.3 percent of planned spending. If that causes a downgrade, someone isn’t thinking too hard about it
Anyone need a pencil ?
If that causes a downgrade, someone isn’t thinking too hard about it
Well, these are the same ratings agencies though…
” If that causes a downgrade, someone isn’t thinking too hard about it”
I’m pretty sure they’re thinking pretty hard about it. It seems that a great deal of thought was put into it, in fact. However, I certainly haven’t dug into the numbers of how they make these assessments myself, so I couldn’t independently validate their decisions.
CStanley — that was a question that came up during the interview as well. Kind of a “why should we listen to you?” sort of thing. The guy kind of said that these agencies were a convenient scapegoat, but that if you looked into the numbers they actually did a pretty good job. It seems possible to me that that’s the case, but it also sounded like a cop-out, so I really don’t know.
Yeah, I’d go with copout.
It’s worth re-posting again:
http://www.nytimes.com/2011/08/03/us/politics/03spend.html
As for the credit rating agencies, despite their tainting during the credit bubble, they’re still authoritative.
I’m wondering of the market (investor) reaction isn’t so much that they’re not confident in S&P’s expectations being met, but by such other things as confidence (the lack thereof) in the super-commission.
I’m wondering of the market (investor) reaction isn’t so much that they’re not confident in S&P’s expectations being met, but by such other things as confidence (the lack thereof) in the super-commission.
The explanations I’ve seen indicate that it’s certainly not so much of a narrow focus on US domestic politics- just a spate of negative outlook on global economy.
While today was not good it is worth keeping in perspective that 500 out of 12,000 is a lot different than 500 out of 2200 (which is what happened in 1987).
Still not good but try to remember 500 isnt as big a share anymore
Thanks, Patrick for putting things into perspective.
Just as I would have tried to put the San Antonio radio station jock into perspective (or at least tried to teach him some basic math—arithmetic—except I was driving)when he was shouting from the rooftops into the ether that the 500+ points drop in the Dow would wipe the average investor, retiree, 401K holder, etc. off the face of the earth—that the 500 points drop would wipe $200,000+ off the accounts of an investor with $500,000 in the stock market and that the sky was falling.
Yes, we had a serious setback today, but not the end of the world for the calm, long-term investor. Perhaps even a good day to buy some quality stocks.
just advice from an old country tailor about stock market… be in if you live with horses. Out, if you dont.
Some details can be found in this article. I love how it started, not just how the agreement is described in general, but how it notes that the budget battles will happen between now and the 2012 elections. Obama wanted the debt limit raised enough to prevent any such budget battles between now and the elections.
http://www.nytimes.com/2011/08/05/us/politics/05deficit.html
Meanwhile, the remarks by Chambers of S&P remain important. Note that the current budget plan, full of gimmicks, achieves at most apparently only $2.4T in savings. S&P wants $4T now (to arrest the debt growth to a total around 100% of GNP) and more later (to reduce the annual debt [and deficits] to a known sustainable limit).
http://www.chicagotribune.com/business/breaking/chi-sp-says-us-deficit-cuts-of-4-trillion-a-good-start-20110728,0,3277102.story
And of course, expect resentment of the ratings agencies.
http://www.washingtonpost.com/blogs/post-partisan/post/the-overrated-ratings-agencies/2011/03/04/gIQANRSOfI_blog.html
By the way, Joe, you’d have heard from Aussie or Kiwi readers by now about how “south” means down, negative, bad. [chuckle]