Switch to Desktop Site
 
 

Dow plunges 512 points: Here's what's bothering the stock market

The Dow suffered its worst day since December 2008, when the US was sliding into recession. The flight to bonds was so extreme that stock market investors were paying the US to hold their money.

Image

Traders work on the floor of the New York Stock Exchange on Thursday, Aug. 4, in New York. The Dow plunged 512 points Thursday, its biggest point decline since 2008.

Jin Lee/AP

About these ads

The stock market went into free fall Thursday and suffered its worst day since December 2008, a time when the economy was sliding into a recession.

Intense selling drove the widely watched Dow Jones Industrial Average down 512.76 points, off more than 4 percent for the day. Almost every market index slid, as did the prices of oil and gold, as investors moved their money into US Treasury bills, a haven in times of stress.

Investor fears were so extreme and the sums of transferred money so vast that the yields on the short-term Treasuries were negative, meaning investors were paying the US government to hold their money.

The drop in stock prices was the eighth in the last nine trading sessions. Since July 22, the Dow average has lost 1,297.32 points, or about 10 percent of its value. In addition, the bad day on Thursday meant that almost all the major averages are lower for the year.

Market analysts blamed the steep drop on a number of factors.

In the morning, there was concern about the health of parts of the European banking system. Then, investors began to worry that a recent sharp rise in the value of the yen would cause export-oriented Japan to slip into recession. And, during the day, some economists began to reassess the probabilities that the US economy might slide into recession.

Weighing on the market is also the prospect that on Friday the Department of Labor will report that the July employment numbers are disappointing. While some of the market's decline previous to Thursday was attributed to concerns over the debt-ceiling negotiations in Washington, analysts did not cite that as a factor in the one-day plunge.

Next

Page:   1   |   2   |   3


Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.

Share

Loading...