Stock markets plunge in worst day since depths of financial crisis
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The Dow Jones industrial average closed the day down 512 points, its worst performance since December 2008, as concerns about a double-dip recession caught fire among investors.
The Dow finished the day down 512.76 points, or 4.3%, at 11,383.68, erasing all of the gains it had made since the beginning of the year and bringing the blue-chip average into an official ‘correction,’ a drop of more than 10% from the high reached in April.
Broader indexes were down even more sharply, with the technology-heavy Nasdaq composite index plummeting 5.1%.
The sharp drop in the U.S. came after a one-day respite Wednesday from nearly two weeks of declines. The last two weeks have seen the sharpest fall in stock prices since 2009 during the depths of the financial crisis.
Most stock markets in Europe ended the day down at least 3% after prices declined steadily during the day. Investors there are worried about increasing debt problems in Italy and Spain.
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 was not improving.
Some investors also were 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, chief strategist at BCG Financial. ‘Markets work in strange and mysterious ways –- and sometimes it takes a 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.
-- Nathaniel Popper