Dow falls 527 points, before finishing at 391 down
NEW YORK (AP) - Stocks have closed sharply lower after investors sold stocks with abandon, convinced that the U.S. and the world are headed for a new recession.
The Dow Jones industrial average fell as much as 527 points, the second consecutive rout since the Federal Reserve announced a change in strategy for fighting the economic slowdown.
At the close of trading, the Dow was down 391.01 points, or 3.5 percent, at 10,733.83. The Standard & Poor's 500 index fell 37.18, or 3.2 percent, to 1,129.58. The Nasdaq composite fell 82.52, or 3.3 percent, to 2,455.67.
Nineteen stocks fell for every one that rose. Trading volume was high on the New York Stock Exchange, at 6.9 billion.
Oil and metals prices, which rely on economic demand, sank. Traders sought the safety of Treasury bonds.
Dow falls more than 400 on fears about economy
NEW YORK (AP) - Investors on Wall Street and around the world sold stocks with abandon Thursday, more convinced than ever that the United States and perhaps the globe are headed for a new recession.
The Dow Jones industrial average fell more than 400 points, the second consecutive rout in the stock market since the Federal Reserve announced a change in strategy for fighting the economic slowdown.
One financial indicator after another showed that investors are quickly losing hope that the economy can keep growing. The price of oil and metals, both of which depend on economic demand, fell sharply. Traders bought bonds for safety.
"Markets rely on confidence and certainty. Right now there is neither," said John Canally, an economic strategist at LPL Financial, an investment firm in Boston.
Economic news was bad around the world. A closely watched survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies.
"The probability of going back into recession is higher now than at any point in the recovery," said Tim Quinlan, an economist at Wells Fargo. He put his odds of a recession at 35 percent, the highest yet.
Christine Lagarde, the head of the International Monetary Fund, said the world economy was "entering a dangerous phase." She told an annual meeting of the IMF and World Bank that nations need credible plans to get their debt under control.
By early afternoon, the Dow was near the low of the day, on what was shaping up to be one of its worst days of the year. At 3 p.m. EDT, the average was down 425 points, or 3.8 percent, at 10,699.
The Dow's lowest close this year is 10,719 on Aug. 10. The Dow has fallen more than 15 percent in two months, since traders began focusing on recession fears and the market was gripped by volatility.
On Thursday, investors looking for a safe place to put their money bought American government debt, which they see as less risky than stocks even as the nation wrestles with its long-term budget.
The yield on the 10-year Treasury note hit a record low of 1.71 percent, down from 1.86 late Wednesday. Yields fall as investors buy bonds and send their prices higher.
The Fed, adopting a new strategy to try to get the U.S. economy going, announced Wednesday that it would shuffle $400 billion of its own holdings in hopes of reducing interest rates on long-term loans.
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