U.S. Stocks Slump Amidst Recession Fears
The Dow Jones Industrial Average plummeted nearly 400 points after trading closed on Thursday, closing at 10,733.83, down more than 3.5%. At its lowest point, the Dow was down 528 points, but a rally late in the day saved it from finishing below last month's low of 10,719.94. The two-day loss of nearly 6% is the worst two-day loss on the Dow since November 2008.
Now some analysis say that, in the wake of recent moves by the Federal Reserve, the Dow is on track for its worst week in three years.
From The Wall Street Journal:
"They're selling literally everything," said Alan Valdes, director of floor trading at DME Securities at the New York Stock Exchange. "It's the realization that things aren't getting better that has traders concerned. They're selling gold, they're selling copper, they're selling everything."
A weak reading on manufacturing in China contributed to Thursday's grim mood. A lack of appreciable progress in containing Europe's debt crisis, which has weighed on markets for months, also added to the negativity.
All blue-chip stocks finished in the red, as did all S&P 500 sectors. Materials and energy stocks were hit hardest, falling as investors acted on their economic slowdown worries and in reaction to the fast rise of the U.S. dollar.
"A lot of people who had very significant investment positions based on a scenario of dollar weakness changed those position pretty violently," said Douglas Cliggott, chief U.S. equity strategist at Credit Suisse. "I think the bottom line of the Fed's decision was, 'No, we're not going to be growing our balance sheet for the foreseeable future.' It leaves the U.S. as the odd man out in this effort to, in effect, grow central bank balance sheets and weaken currencies."
The NASDAQ also slid more than 80 points, or 3.25%, while the S&P 500 suffered a 37.2 point drop. Both dips are the fifth-largest drop this year on each index.
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