The Dow plunges more than 400 points from the opening bell, and the Nasdaq is down more than 6%, following overnight sell-offs in Europe and Asia.
By Martin Zimmerman
7:33 AM PDT, October 24, 2008
Stocks in New York plunged from the opening bell today as investors reacted to overnight sell-offs in European and Asian markets, sparked by fresh worries that the world is sliding into a deep recession.
As of 7 a.m. Pacific time, the Dow Jones industrial average was down 330.30 points, or 3.8%, to 8,360.95. The broader Standard & Poor's 500 index was down 4.2% and the tech-heavy Nasdaq composite was off 5%.
Shares were actually off their worst levels of the day. The Dow plunged more than 400 points before recovering a bit, and the Nasdaq was down 100 points, or more than 6%, from the open.
"There's a lot of panic out there today," Scott Fullman, director of derivatives investment strategy for WJB Capital Group told the Associated Press. "People have been saying that we're in a recession. This is the realization."
The downdraft on Wall Street followed a round of furious selling overseas. Stocks in Japan tumbled almost 10%,while markets in Germany and France were down around 10% this morning.
Increasingly dire economic news underpinned the selling. Japanese electronics maker Sony and German automaker Daimler both fell sharply on poor earnings news. Third-quarter earnings reports from U.S. companies have also brought a slew of disappointments and lowered profit forecasts for the rest of the year and into 2009. Most recently, tech giant Microsoft last night reported a weak outlook.
Oil added to the downward spiral. Light, sweet crude was down $4.54 to $63.30 premarket electronic trading on the New York Mercantile Exchange. Although good for consumers, falling oil prices depress energy stocks and, more importantly, are a key indicator that traders believe the world is falling into recession, cutting the demand for oil and other commodities. Gold prices also plunged.
The news was a bit better in the credit markets, which investors are watching closely because it has been a meltdown in the global credit system that has sparked the current bear market on Wall Street.
The London Interbank Offered Rate, a key indicator of lending between banks, fell for the 10th straight day, indicating that credit markets continue to thaw. But the fall in Libor has slowed noticeably in recent days.
More worrisome, demand for Treasury securities jumped as investors sought a safe place to put their money. The yield on the three-month Treasury bill slid to 0.72%, down from 0.94% Thursday.
Zimmerman is a Times staff writer.
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