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U.S. stocks plunged, with the Dow losing more than 350 points Thursday, as investors remain on edge about the global economy. There's "total fear" in the market right now, said Bob Doll, chief equity strategist at BlackRock. The Dow Jones industrial average (INDU) dropped 350 points, or 2.5%, with Alcoa (AA, Fortune 500), Caterpillar (CAT, Fortune 500) and Bank of America (BAC, Fortune 500) among the biggest drags on the blue chip index. The only gainer was Kraft (KFT, Fortune 500), following news that the company plans to split itself in two. The S&P 500 (SPX) was down a staggering 41 points, or 3.2%, with only nine of the index's components showing modest gains. The Nasdaq (COMP) lost 91 points, or 3.4%. Some of the better performing tech stocks, Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and Netflix (NFLX) were all down between 2% and 3%. [cnn]
All three indexes have now erased their gains for the year and are in 'correction' territory - defined as a 10% from their cyclical highs. Over the past 10 days alone, the indexes have dropped more than 8%. The market's fear gauge -- the VIX (VIX) -- surged 16% to a reading of 27. That's still just shy of 30 -- the level that signals a high degree of fear. With the VIX up 53% from the start of the year, it's clear that fear has been on the rise. It should come as no surprise that investors flocked to assets perceived as low-risk, including U.S. bonds and gold. Treasury prices rose, pushing the yield on the 10-year note down to 2.48% from 2.6% late Wednesday, and gold futures for December delivery rose $2.40 to $1,668.70 an ounce. Earlier in the session, gold hit a record high of $1,684.70 an ounce. Thursday's losses came as European stocks also plunged. Britain's FTSE 100 (UKX) tumbled 3.4%, Germany's DAX (DAX) lost 3.9% and France's CAC 40 (CAC40) fell about 3.4%. Economy: Fears about a global economic slowdown are at the forefront of investors minds amid recent weak economic data. Early Thursday, the latest reading on jobless claims showed a large number of Americans remain unemployed. But economic woes weren't contained just to the United States. Taking dramatic steps to shore up their financial markets, Japan's government stepped in to weaken the yen, and the European Central Bank decided to re-enter the European bond market. "It's true that we are in a period of a high level of uncertainty, not only in euro area but at the global level," ECB President Jean-Claude Trichet said in a press conference Thursday. Thursday morning, the Labor Department's weekly initial jobless claims report showed that first-time unemployment claims totaled 400,000 last week. Economists had expected weekly unemployment claims to rise to 405,000 from last week's revised 398,000 claims. |
