`

Wall Street's bumpy ride continues

October 10, 2008

Wall Street extended its devastating losses this morning, but prices swung sharply as investors scooped up shares decimated by more than a week of intense and panicked selling. The Dow Jones industrials, down nearly 700 points in the opening minutes of trading, soon recovered to a loss of just over 200, and the other major indexes fluctuated as well.

Frozen credit markets and a loss of confidence in the world's financial system have caused the Dow to drop 21 percent in just 10 trading days. The blue chip index tumbled 678 points yesterday and is heading to its worst weekly point drop - and one of its biggest weekly percentage drops - since being created 112 years ago.

Today's gyrations likely were caused by computer-driven "buy" orders that kicked in when prices had fallen far enough to make some stocks look like attractive bets. But that buying reflected no lifting of the market's deep despair, and so the selling continued.

"Momentum is running against the market and you don't want to get hit by a train," said Jack Ablin, chief investment officer at Harris Private Bank. "This is now about market psychology. There's extreme fear and panic out there."

A
t the start of today's session, losses for the year totaled a staggering $8.3 trillion, as measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in the United States.

A stream of selling forced exchanges in Austria, Russia and Indonesia to suspend trading, and those that remained opened were hammered. The rout in Australian markets caused traders there to call it "Black Friday."

The New York Stock Exchange would halt trading if the Dow dropped by 10 percent during the session. If it happens before 2 p.m., trading will be halted for an hour. A drop below 10 percent between 2 p.m. and 2:30 p.m. will trigger a 30-minute halt. No halt will be made during the remainder of the afternoon.

European stocks sank, with Britain's FTSE-100 down 8.09 percent, German's DAX down 9.4 percent, and France's CAC-40 down 9.7 percent. In Asia, the collapse of Japan's Yamato Life Insurance caused already nervous investors to pull even more money out of the market - the Nikkei 225 fell 9.6 percent.

The Dow was down 210.50, or 2.45 percent, to 8,368.60 after dropping 696 in the first minutes of the session. The Standard & Poor's 500 index was off 20.56, or 2.26 percent, at 889.36, while the Nasdaq composite index fell 19.98, or 1.21 percent, 1,625.14.

Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 313.2 million shares.

Investors continue to shift money into safer investments, most of it going into the government bond market. The yield on the three-month Treasury bill plunged to 0.35 percent from 0.58 percent late yesterday. That suggests that demand for T-bills, regarded by investors as the safest assets around, remains high.

Central banks around the world were forced to cut interest rates this week after continuing problems in the credit market triggered concerns that banks will run out of money. Analysts have described the mood on trading floors as panicked, with investors bailing out of stocks on fears there is no end in sight to the financial carnage.

Finance ministers and central bankers from the Group of Seven nations will meet today to discuss the economic meltdown. One of the potential remedies expected to be discussed at the meeting in Washington is for governments to guarantee lending between banks.

President Bush also was scheduled to make a statement this morning about the financial turmoil, but he is not expected to outline any new policy moves.

Source: XMLFULL/XMLFull21538.xml
ADVERTISEMENT

Recent Articles by Associated Press

Comments powered by Disqus