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June 23, 2010 6:03 PM

Stocks Plunge As Dollar Hits New Low

(CBS/AP)  Wall Street suffered its second big drop in a week Wednesday, with investors worried about spreading fallout from the credit crisis at banks and about a dollar that just keeps getting weaker. The Dow Jones industrial average fell more than 360 points, just about matching its plunge of last Thursday.

The Dow's plunge was its third 300-point drop in just four weeks, reports CBS News correspondent Anthony Mason. And the Dow has now fallen 800 points, or 6 percent, from its all-time high less than a month ago.

Stocks were rattled right out of the gate after General Motors posted a stunning $39 billion loss, most of it due to tax accounting charges.

Then the dollar tumbled to new lows, adds Mason, after a Chinese official called for his country to move some of its foreign currency reserves out of the weakening greenback and into stronger currencies like the euro.

Meanwhile, oil prices stalled in their climb toward $100 a barrel after a government report said oil inventories fell less than expected last week while refinery utilization remained flat.

Oil investors largely viewed the report as neutral in that it confirmed a view that oil supplies are falling, but offered no real surprises. A larger than expected drop would most certainly have propelled oil past $100 a barrel for the first time.

Crude inventories did fall at the closely-watched New York Mercantile Exchange delivery terminal in Cushing, Okla., but that did not appear to be enough to propel prices sharply higher.

"We got kind of a mixed reaction," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

At the pump, meanwhile, the national average price of a gallon of gas rose 1.9 cents overnight to $3.043, according to AAA and the Oil Price Information Service. Prices are up nearly 29 cents since mid-October and are 85 cents higher than a year ago.

"I don't think it's a question of whether we hit $100. It's a question of how much time we might spend there," Tom Kloza of the Oil Price Information Service told CBS' The Early Show.

The 13-nation euro hit a fresh record against the dollar, rising to $1.4729 - before falling back. The dollar fell not only against the euro but in Asia following a report that a senior Chinese political figure said China should diversify its $1.43 trillion foreign exchange reserves into the euro and other strong currencies.

The fear with a huge drop like Wednesday's is whether it is part not just of a correction, which is a 10 percent pullback in stock prices, but that it could be the beginning of a bear market. With the huge volatility that has swept Wall Street since the summer, and triple-digit moves in the Dow becoming commonplace, no one can be sure.

Still, the concern on the Street is that the extent of the fallout from the credit market crisis that has led to billions of dollars in losses for major banks and investment firms is not yet known. With Citigroup Inc. announcing Sunday it needed to take an additional $8 billion to $11 billion in writedowns, investors are very uneasy not just about stocks, but the economy as a whole.

"The financials are the bodyguards of the market and when the bodyguards are taking shots then the market can't do well," said David Darst, chief investment strategist for Morgan Stanley's global wealth management group.

"A lot of the bad stuff is known, what the markets are worrying about is the unknown," Darst said.

According to preliminary calculations, the Dow fell 360.92, or 2.64 percent, to 13,300.02. The Dow, which had gained 117 points on Tuesday, had fallen 362.14 last Thursday, reflecting the extreme fractiousness on Wall Street these days.

Broader stock indicators also pulled back Wednesday. The Standard & Poor's 500 index fell 44.65, or 2.94 percent, to 1,475.62, moving below the psychological benchmark of 1,500. The Nasdaq composite index fell 76.42, or 2.70 percent, to 2,748.76.

The Russell 2000 index of smaller companies fell 25.81, or 3.22 percent, to 775.96.



© 2010 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Add a Comment See all 541 Comments
by donbl1 November 8, 2007 2:40 PM EST
Write,,,,

Then free up more areas for drilling!!!
Reply to this comment
by writescripts November 8, 2007 2:18 PM EST
It is just a matter of time now before our economy goes down the toilet due to hyper-inflation. Oil is going to be one of the main culprits because our lazy elected representatives are not doing their jobs, and letting the oil companies weaken the dollar by over charging the public.
Reply to this comment
by finewoven November 8, 2007 1:17 PM EST
So, what is the net of the dollar devaluation? Higher cost imports, eventually higher interest rates and more American jobs.
Posted by donbl1 at 09:41 AM : Nov 08, 2007

Yes, and to keep stagflation in check.
Reply to this comment
by donbl1 November 8, 2007 12:41 PM EST
The value of the dollar is sort of counter common sense. The dangers of a weak dollar are adequately reported.

However the benefits of a Weak dollar?

1. Encourages vacationers from overseas.
2. Increases exports of American goods
3. Encourages overseas manufacturers to move factories to the US. That is what caused Honda and Toyota to initially move factories to the US. Now they are protected from currency moves.
4. Encourages overseas investments in hard American assets - re: Japanese purchases of US land, buildings and companies in the late 80''s and early 90''s which they eventually sold at a loss BTW.
5. Forced appreciation of the Yuan.

So, what is the net of the dollar devaluation? Higher cost imports, eventually higher interest rates and more American jobs.
Reply to this comment
by jowand November 8, 2007 12:20 PM EST
He''''s published three books on economics. Read ''''em free at ronpaullibrary.org
Posted by TopProphet at 04:30 AM : Nov 08, 2007

Let me have the Ron Paul Special a Bologna-Spam Whopper, make it QUICK.
Reply to this comment
by jowand November 8, 2007 12:18 PM EST
If we had exploited our own US oil reserves 15, 10 or even 5 years ago we wouldn''t be having a problem right now with the so called world oil shortage. Dollar down, exports up 16% last quarter, not bad. This will probaly make China let the Yuan float up in value; China is buying all of their oil based on the value of the US dollar as the Yuan is pegged to the US dollar, it should be much higher. This will make Chinese imports to the US much more expensive encouraging more BUY AMERICAN.
Reply to this comment
by radiob-2009 November 8, 2007 11:47 AM EST
Kudos to Ozzy and Speakinup for keeping the conversation civil yesterday.
Reply to this comment
by brianbwb-2009 November 8, 2007 9:25 AM EST
"Leave it to ''''tbweb'''' to wrap up his blather with some unsubstantiated Zionist apologist screed against Iran.
How very predictable.
Posted by FeelFree1"

Don''t be too hard on tb, I get the feeling he genuinely cares, but has difficulty shedding decades of brainwashing by the journalism, entertainment, education, and religious industries.

Most people have difficulties when contrary proof comes up against long held beliefs. Imagine for a moment, the skies thundering "I send My Son again", then the clouds open up, and a naked "Black" man steps out, smoking a joint.

Perhaps a quarter of the world''s population would instantly go totally insane.
Reply to this comment
by topprophet November 8, 2007 7:31 AM EST
Ron Paul can win the GOP nomination. If he does, I predict a landslide victory in November of 2008. Even the oddsmakers in Vegas aren''t willing to discount his chances. They''re currently giving him 3:1 odds to win against Hitlery if he gets the nomination. Romney, McCain and the globalist, sell-out Giuliani aren''t given anything better than a 35:1 chance of winning if they get the GOP nod. All it takes is for formerly apathetic individuals to get off the couch and nominate him in their local Republican primary or caucus process. Political parties are nothing more than tools. Those who read the manual and use the tools properly will win the nomination for their candidate. For the past 20 years, many good people have stayed at home and accepted whatever candidate they let others select for them. This year, those people are learning how to use their vote to bring about positive and long overdue political change in this country. To make a difference, you must participate in the Republican primary election or caucus process in your county, precinct or district. Nothing else matters. If we do this, we win. If not, we lose. The GOP has been suffering from declining participation for decades. Fewer than 10% of registered voters have ALL the power because they actually participate. Now the remaining 90% must surge to use their vote as a tool for bringing about positive change to our country. The time to act is now. The time for political revolution has come. The time for Ron Paul is NOW!
Reply to this comment
by feelfree1 November 8, 2007 7:30 AM EST

Leave it to ''tbweb'' to wrap up his blather with some unsubstantiated Zionist apologist screed against Iran.

How very predictable.
Reply to this comment
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