Dow Takes Plunge

Key Index Closes Down 416 Points, Worst Trading Day Since 9/11

(CBS/AP)  Stocks had their worst day of trading since the Sept. 11, 2001, terrorist attacks Tuesday, briefly hurtling the Dow Jones industrials down more than 500 points on a worldwide tide of concern that the U.S. and Chinese economies are stumbling and that share prices have become overinflated.

At one point — about 3 p.m. — the Dow dropped almost 200 points in almost a split-second, reports CBS News correspondent Anthony Mason.

That split-second dive, in part, happened because of a computer glitch that kept some trades from being immediately reflected in the index of 30 blue-chip stocks.

But what started the massive meltdown? It was not some bad piece of economic news here at home.

A 9 percent slide in Chinese stocks, which came a day after investors sent Shanghai's benchmark index to a record high close, set the tone for U.S. trading. The Dow began the day falling sharply, and the decline accelerated throughout the course of the session before stocks took the huge plunge in late afternoon as computer-driven sell programs kicked in.

The Dow fell 546.02, or 4.3 percent, to 12,086.06 before recovering some ground in the last hour of trading to close down 416.02, or 3.29 percent, at 12,216.24. Because the worst of the plunge took place after 2:30 p.m., the New York Stock Exchange's trading limits, designed to halt such precipitous moves, were not activated.

"What we're seeing here in the U.S. is something that happened globally overnight," Eugene Peroni of Claymore Advisors told CBS News Radio. "We're seeing most markets lower, so one can't make the case that this is really just particular to the U.S. market."

The decline was the Dow's worst since Sept. 17, 2001, the first trading day after the terror attacks, when the blue chips closed down 684.81, or 7.13 percent.

The drop hit every sector of stocks across the market. Riskier issues such as small-cap and technology stocks suffered the biggest declines.

There are 500 stocks in the Standard & Poor's 500 Index, adds Mason; all but three of then went down.

But analysts who have been expecting a pullback after a huge rally that began last October and sent the Dow to a series of record highs, were unfazed by Tuesday's drop.

"This corrective consolidation phase isn't just going to be one day, but we don't believe this is going to be a bear market," said Bob Doll, BlackRock's global chief investment officer of equities.

Some investors also tried to put Tuesday's slide into a longer-term perspective.

"All who invest should feel grateful that we've had a great run for the last 12 to 18 months," said Joel Kleinman, a Washington, D.C. attorney, adding that he has learned to not read too much into any short-term ups and downs. "This is another day in the market."

Still, traders' dwindling confidence was knocked down further by data showing that the economy may be decelerating more than anticipated. A Commerce Department report that orders for durable goods in January dropped by the largest amount in three months exacerbated jitters about the direction of the U.S. economy, just a day after former Federal Reserve Chairman Alan Greenspan said the United States may be headed for a recession.

"It looks more and more like the economy is a slow growth economy," said Michael Strauss, chief economist at Commonfund. "Moderate economic growth is good — an abrupt stop in economic growth scares people."

The market had been expecting the government on Wednesday to revise its estimate of fourth-quarter GDP growth down to an annual rate of about 2.3 percent from an initial forecast of 3.5 percent, and grew increasingly nervous on Tuesday that the figure could come in even lower.

The housing market, which the Street had been hoping had bottomed out, also looked far from recovery after a Standard & Poor's index indicated that single-family home prices across the nation were flat in December. A later report from the National Association of Realtors said existing home sales climbed in January by the largest amount in two years, but the data didn't erase housing-related concerns, as median home prices fell for a sixth straight month.

[antoniof123]

For you stupid morons that do not understand the first thing about debt. China is stuck with 1 trillion dollars of T-Bills that they can not do a thing with. If they spend they get inflation that will be out of control. They are stuck we in America are stuck because we own the money thank you to the Republicans who only want to spend and spend no tax and no penetliles for those that outsource. So the world is in a pickle. The US consumes 25 percent of everything so that means apply the rule that for every one job 5 are related. This means the world is in real trouble. Thank you for all your support.

[fizzal-2009]

abandon Iraq now maybe you can see how were all connected somehow.

[bellal-2009]

The economy has NEVER been "great" or "good" for the middle class since the late 1990's. I need not mention all the reasons why, but needless to say, a recession would just take an economy, (for the middle class), that's already as fragile as a porcelain vase, and just drop it from a 10 story building!
Posted by acauble1 at 03:00 PM : Feb 27, 2007


This was a great post. I only copied the last paragraph but all of it was good.

[mjv2944]

Well so must for the "world economy". Now you know why people have no confidence in Wall Street. How can a trumpted up completely govt controlled economy put our market in to a tail spin. All you free traders are going to get to see your first and probably long lasting economic disaster. Neocon, repubs and dems all have equal share. All the big election talk ended up being just another dose of b-llsh-t. Gas is up to 2.50 and the economy is fastr goping down the chute. Its going to get really really ugley.

[hawksprings]

PART TWO for condumism:

Definition of a Facist Govt:

8. Religion and Government are Intertwined
Like having Gore do fundraisers at a Buhddist temple?

9. Corporate Power is Protected
You must be talking about Tyson foods in Ark?

10. Labor Power is Suppressed
I don't have time to think of something.

11. Disdain for Intellectuals and the Arts
Al Gore, the Intellectual who created the internet?

12. Obsession with Crime and Punishment
As opposed to watching the incredibly high murder rate in Democrat-controlled places like New Orleans?

13. Rampant Cronyism and Corruption
Are you talking about the Clinton years again? How many indictments total?

14. Fraudulent Elections
Do you mean trying to not count the Military absentee votes in the Gore/Bush campaign?

15. DENIAL of all of the above!
I'm not denying I've made my point.

.

[hawksprings]

condumism, you're funny. And you ryhme with Communism.

Let's go through some of your points and see if they don't apply to the Dembots:

Definition of a FASCIST:
1. Powerful and Continuing Nationalism
See, the Dembots would just turn the USA over to the UN.
2. Disdain for the Recognition of Human Rights
What about Paula Jones' human right? Juanita Broderick? et al?

3. Identification of Enemies/Scapegoats as a Unifying Cause
Are you talking about Hillary's Vast Right Wing Conspiracy??

4. Supremacy of the Military
As opposed to the gutting of it, ala Carter?

5. Rampant Sexism
See Point 2 above.

6. Controlled Mass Media
Can you say "Dan Rather"?

7. Obsession with National Security
As opposed to passing on having Osama handed to you on a silver platter? Or doing nothing after the '93 WTC attack, or the USS Cole attack? Or getting blow jobs while on the phone about security issues?

PART TWO TO COME.

[condumism]

2007 INTEREST on the Reagan/Bush Debt: $500 BILLION, or $1,670 for every man, woman and child citizen of the USA. Thanks to the self-centered, imbecilic Republicons, China (a communist dictatorship) controls the purse strings of the US economy.

[j0hnwi11iams]

To be a good republican you must perfect the art of DEEP denial. The first thing you must deny is any reasonable understanding of the opposing opinion.

One nation under FRAUD
In FRAUD we trust
FRAUD bless America

[hawksprings]

stevex47,
Thanks for speaking on behalf of the world. I'm sure they all agree with you.

[j0hnwi11iams]

Jeeze, we would like to help your economy, but we're fresh out of disposible income.

[condumism]

Definition of a FASCIST, ie: an AMERICAN GOPig:
1. Powerful and Continuing Nationalism
2. Disdain for the Recognition of Human Rights
3. Identification of Enemies/Scapegoats as a Unifying Cause
4. Supremacy of the Military
5. Rampant Sexism
6. Controlled Mass Media
7. Obsession with National Security
8. Religion and Government are Intertwined
9. Corporate Power is Protected
10. Labor Power is Suppressed
11. Disdain for Intellectuals and the Arts
12. Obsession with Crime and Punishment
13. Rampant Cronyism and Corruption
14. Fraudulent Elections
15. DENIAL of all of the above!

15 Ways to be a good Democrat:

1. You have to be against capital punishment, but support abortion on
demand.

2. You have to believe that businesses create oppression and governments
create prosperity.


3. You have to believe that there was no art before federal funding.

4. You have to believe that the AIDS virus is spread by a lack of
federal funding.

5. You have to believe that the same teacher who can't teach 4th-graders
how to read is somehow qualified to teach those same kids about ***.

6. You have to believe that hunters don't care about nature, but PETA
activists do.

7. You have to believe the NRA is bad because it supports certain parts
of the Constitution, while the ACLU is good because it supports certain
parts of the Constitution.

8. You have to believe that taxes are too low, but ATM fees are too
high.

9. You have to believe that standardized tests are racist, but racial
quotas, and set-asides are not.

10. You have to believe that the only reason socialism hasn't worked
anywhere it's been tried is because the right people haven't been in
charge.

11. You have to believe that homosexual parades displaying drag queens
and transvestites should be constitutionally protected, and manger
scenes at Christmas should be illegal.

12. You have to believe that this message is a part of a vast,
right-wing conspiracy.

GOD BLESS AMERICA

Oops, can't do that either.

[condumism]

Thanks to the borrowing spree of the irresponsible, self-centered Republicons over these past 26 years, the dollar is becoming more and more worthless with each passing day. The blame can go directly to all those baby boomers that voted Reagan/Bush/Bush, and voted for the worst 12 years of Congress this country has ever experienced: 1994-2006! Congrats to all of you self centered Republicons! Clearly all you care about, and all you have ever cared about, is yourselves!.

[terrapin78]

Another feather in Bush's cap.

How many more plunges will happen on Bush's watch?

[stevex47]

Hawksprings,

The world vehemently despises your side. There's probably a few reasons why.

Around the world Clinton is beloved. There's probably a few reasons why.

[stevex47]

Thanks for the reply hawksprings,

If you recall, Clinton/Greenspan daily tweaked and fined tuned and adjusted conditions for the economy. It took a few years, but thankfully, Congress literally watched in awe as the two worked their magic. They didn't fight it because they were smart enough to see that they also benefited greatly. THE most prosperous time this country will probably ever know. LOADS of repubs should thank Clinton for helping them prosper.

[wiredwilly]

The sky is falling !! The sky is falling !!!!
Greenspan is a crusty old pessimist. So what.
The essential proposition of Jeffersonian Democracy is that
America , through the wisdom of the People, will be a beacon of light unto the World. So the Dow has a sell off. China having an economic "slowdown" means a train going 150 mph is now going 145. My advice is to stop wasting trillions on Iraq, stop printing currency like it was water, tighten the economic belt and quit acting like your pants are on fire. I can almost guarantee the sun will come up in the East tomorrow morning.
Next week the Market will be back up and come back stronger.

[scott4261]

Actually, George, yesterday was.

[tuckerndfw]

The sharks are moving in.

Buy low, sell high.

If the markets were stable, sharks could never make any (real) money.

Capitalist economies rely on winners & losers, so the market has to produce losers so winners can win.

It's built into the system. Nothing to worry about unless you are one of the losers.

[scott4261]

Buy now, while the market's low....