US stocks - Wall Street extends huge losses as markets globally sell off over frozen credit markets
Written by admin on October 10th, 2008 in Investment, News.
US stocks extend huge losses over credit concerns
Wall Street extends huge losses as markets globally sell off over frozen credit markets
NEW YORK (AP) — Wall Street extended its devastating losses Friday, 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, 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 Thursday, and is heading to its worst weekly point drop, and one of its biggest weekly percentage drops, since being created 112 years ago.
Friday’s gyrations were likely caused the 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.”
At the start of Friday’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 U.S.
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 fell 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 Thursday. That suggests that demand for T-bills, regarded by investors as the safest assets around, remains high.
Longer-term Treasury yields moved higher as investors moved into shorter term issues. The yield on the benchmark 10-year note rose to 3.88 percent from 3.76 percent late Thursday.
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 Friday 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 is also scheduled to make a statement Friday morning about the financial turmoil, but is not expected to outline any new policy moves. Regardless, words are unlikely to stave off another brutal day, with futures pointing to another volatile session.
The Russell 2000 index of smaller companies fell 8.01, or 1.60 percent, to 491.19.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
US stocks extend huge losses over credit concerns
By Tim Paradis, AP Business Writer
