Stock Market Closes Down 520 Points
Dow dips below 11,000 again but some wonder if the markets could get worse
Update: After a day of volatile trading, the stock market closed with the Dow Jones Industrial Average down 520 points, a drop of 4.7 percent. That follows a 630-point drop Monday and a 430-point gain Tuesday, and USA Today reports that "High-speed computerized trading, called high-frequency trading, is exacerbating the market's big swings." The Wall Street Journal tied the sell-off to the Federal Reserve's admission that it doesn't expect the economy to get much better in the next year, plus worries over the health of European banks. The S&P 500 fell 4.4 percent, or 52 points, and the Nasdaq lost 4.1 percent, or 101 points.
Original post: The U.S. stock market saw a sharp sell-off Wednesday morning, dropping more than 3 percent, but by afternoon the losses were somewhat pared back, The Wall Street Journal's Jonathan Cheng reports. Still, the market is down 11 percent in August alone--and down 15 percent in the last three weeks. The CBOE Market Volatility Index--known as the "fear gauge"--hit 12 percent. "Markets are having an extremely difficult time here -- volatility is rising and the speed and voracity of these declines is so rapid I don't think anyone can wrap their heads around this," Robert Pavlik, chief market strategist at Banyan Partners, told Cheng.
At 2:45p.m. Wednesday, the Dow Jones Industrial Average was again below 11,000, down 2.6 percent. The S&P 500 was down almost 2 percent, the Nasdaq down 1.6 percent. That follows a rough week--a loss of 600 points in a sell-off Monday, followed by a 400-point gain Tuesday afternoon, followed by a sell-off Wednesday wiping out that gain. CNBC's John Carney says that could mean the worst is yet to come:
Despite the riptide rides the market has taken over the past two weeks, investment pros aren't running for the exits. ... Evidence that the stock landslide hasn't chased many investors to the sidelines comes from the Investors Intelligence survey, which checks newsletters from market pros across the country to see which way they are titling....In times of aggressive market selloffs there's a need for capitulation -- or the point when the final stragglers who don’t believe in the drop finally get out. That marks a turning point where the market can gain.But with the Investors Intelligence spread far from normal levels associated with a bottom, that could spell trouble for the already-volatile market.
This article is from the archive of our partner The Wire.