Dow Takes Plunge

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

(CBS/AP) 
But a growing feeling that Wall Street, which has had a big run-up since October, was due for a correction also played into Tuesday's decline.

"I think that the market was prepared to pull back. The constellation of issues that were worrying the market came to a head," said Quincy Krosby, chief investment strategist at The Hartford.

Just a week ago, the Dow had reached new closing and trading highs, rising as high as 12,795.92.

The broader S&P's 500 index was down 50.33, or 3.47 percent, at 1,399.04, and the tech-dominated Nasdaq composite index was off 96.65, or 3.86 percent, at 2,407.87.

A suicide bomber attack on the main U.S. military base in Afghanistan where Vice President Dick Cheney was visiting also rattled the market.

China's stock market plummeted Tuesday from its record highs as investors took profits when concerns arose that the Chinese government may try to temper its ballooning economy by raising interest rates again or reducing more of the money available for lending.

"Corrections usually happen because of a catalyst, and this may be it," said Ed Peters, chief investment officer at PanAgora Asset Management. "The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop."

The Shanghai Composite Index tumbled 8.8 percent to close at 2,771.79, its biggest decline since it fell 8.9 percent on Feb. 18, 1997. Since Chinese share prices doubled last year as investors poured money into the market after the completion of shareholding reforms, trading in Shanghai has been very volatile.

Hong Kong's benchmark Hang Seng Index dropped 1.8 percent, and Malaysia's Kuala Lumpur Composite Index fell 2.8 percent. Japan's Nikkei stock average fell a more moderate 0.52 percent, but European markets were rattled — Britain's FTSE 100 lost 2.31 percent, Germany's DAX index dropped 2.96 percent, and France's CAC-40 fell 3.02 percent.

Bond prices shot higher as investors bought into the safe-haven Treasury market, pushing the yield on the benchmark 10-year Treasury note down to 4.47 percent, its lowest level so far this year, from 4.63 percent late Monday. The bond buying was sparked primarily by the durable goods orders, which the Commerce Department said fell 7.8 percent, much more than what the market expected.

The durable goods drop raised the chance of the Federal Reserve easing interest rates later in the year — a possibility that makes the bond market an attractive place to be right now.

The hope for slowing inflation could be dashed, though, if energy costs keep rising. Oil prices initially fell Tuesday on worries that Chinese demand could be dampened should its economy slow down, but later rose on escalating tensions in the Middle East. Light, sweet crude for April delivery fell 62 cents a barrel to $60.77 on the New York Mercantile Exchange.

The dollar slipped against other major currencies, while gold also fell.

The Dow has been climbing at a steady rate since last summer, but over the past few trading sessions, stocks have pulled back on the worry that the market is due for a correction. Many analysts have noted that the Dow hasn't seen a 2 percent decline in more than 120 sessions.

Data indicating a slower economy had recently been giving stocks a boost on the hopes that the Fed will lower interest rates, which could reinvigorate consumer spending and the struggling housing market. But the market may fall further before that happens, analysts said.

"If in a week or two, the psychology in the U.S. market turns to the realization that we're in a modest growth economy of 2 to 3 percent growth, that will help temper inflation pressures going forward. If that perception evolves, there's an increase in the likelihood that the Fed will be lowering rates rather than raising rates. Structurally, it's a development that should be good for the equity market, but it might be an event that unfolds after prices are lower," Strauss said.

Declining issues outnumbered advancers by about 7 to 1 on the New York Stock Exchange, where volume came to 2.38 billion shares.

The Russell 2000 index of smaller companies dropped 31.03, or 3.77 percent, at 792.66.

[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....