Dow Dives More Than 300 Points; S& P and Nasdaq Also Plunge
By Tomoeh Murakami Tse and Frank AhrensWashington Post Staff WritersFriday, July 27, 2007; Page D03
The U.S. stock market yesterday suffered its second worst day of 2007, with the Dow Jones industrial average plunging more than 300 points as anxiety over housing and increasing evidence of weakness in the lending market spilled over into stocks.
Investors fled from almost every type of stock, hunkering down with U.S. Treasurys and other safer investments.
It was the biggest drop in stocks since easy access to credit, the economy's engine in recent years, began showing signs of drying up several months ago. The problems started when investors in securities backed by risky mortgages were hurt by the housing downturn earlier this year, making them worried about other debt-related products such as those that finance corporate takeovers.
Fueling the sell-off in stocks yesterday were poor earnings reports by three major home builders, an announcement from the nation's second-largest mortgage lender that it was shuttering a previously lucrative division and a dismal report on new-home sales, all evidence that the housing slump may last longer and be more painful than the market had expected.
"Markets are imploding," Sal Morreale of Cantor Fitzgerald said from his trading desk in Los Angeles. "A lot of people have been calling for this for a long time. You're finally starting to see reality."
The Dow fell 311.50 points, or 2.3 percent, to close at 13,473.57. It was the biggest one-day drop since Feb. 27, when the blue-chip average of 30 stocks lost 416 points. At one point yesterday afternoon, the Dow had dropped nearly 450 points.
The Standard & Poor's 500-stock index, a broader market measure, fell 35.43 points, or 2.3 percent, to 1482.66. The tech-heavy Nasdaq lost 48.83, or 1.8 percent, to 2599.34.
The losses took place less than a week after the Dow rode a wave of strong corporate earnings, surging past the 14,000 mark for the first time. Yesterday's sell-off occurred despite positive earnings reports from key companies such as Ford.
The slide was sharp enough to automatically trigger trading curbs at the New York Stock Exchange that are designed to limit wild swings in trading. Stocks that fell outnumbered those that gained by 13 to 1.
Financial-services firms were particularly hard hit in the United States yesterday, reflecting investor concern over the changing conditions in the lending market. Shares of Goldman Sachs and Bear Stearns dropped nearly 4 percent.
Treasury Secretary Henry M. Paulson Jr. yesterday downplayed concerns about a broader market meltdown. "Risk is being repriced and that's leading to some volatility," Paulson said, adding that "we're fortunate we have a very strong global economy and a healthy economy in the U.S."
more:
No comments:
Post a Comment