Selling wave circles globe
Wall Street had its worst day of trading since the Sept. 11 terrorist attacks
NEW YORK » Stocks had their worst day of trading since the Sept. 11, 2001, terrorist attacks yesterday, hurtling the Dow Jones industrials down more than 400 points on a worldwide tide of concern that the U.S. and Chinese economies are stumbling and that share prices have become overinflated.
The steepness of the market's drop, as well as its global breadth, signaled a possible correction after a long period of stable and steadily rising stock markets that had not been shaken by such a volatile day of trading in several years.
The repercussions continued today in morning trading in Asia. Shares in Tokyo, Hong Kong, Australia, New Zealand, the Philippines and Indonesia all tumbled more than 3 percent. The region's biggest bourse, the Tokyo Stock Exchange, saw its Nikkei 225 stock index fall 644.85 points, or 3.56 percent, to 17,475.07 points.
Hong Kong's Hang Seng Index dropped 3.8 percent, or 759 points, to 19,289.30 after opening. Australia's benchmark S&P/ASX200 index shed 206.9 points, or 3.45 percent, to 5,786.9, while New Zealand fell more than 3 percent.
Chinese regulators shifted into damage control today, denying rumors of plans for a 20 percent capital gains tax on stock investments as share prices recovered modestly today following their worst plunge in a decade.
About an hour after trading began, the Shanghai Composite Index was up 1.2 percent to 2,804.28, after opening down 1.3 percent.
The turmoil began with a 9 percent slide in Chinese stocks yesterday, which itself came a day after investors sent Shanghai's benchmark index to a record high close.
The Dow began yesterday falling sharply, and the decline accelerated throughout the course of the session before stocks took a huge plunge in late afternoon as computer-driven sell programs kicked in, and also as a computer glitch caused a delay in the recording of a large number of trades.
The Dow fell 546.20, or 4.3 percent, to 12,086.06 before recovering some ground in the last hour of trading to close down 416.02, or 3.29 percent, at 12,216.24, leaving it in negative territory for the year.
Because the worst of the plunge took place after 2:30 p.m., the New York Stock Exchange's trading limits, designed to halt such precipitous moves, were not activated.
It was the Dow's worst point decline since Sept. 17, 2001, the first trading day after the terror attacks, when the blue chips fell 684.81, or 7.13 percent. In percentage terms, it was the biggest decline since March 24, 2003, when the index fell 3.6 percent as investors started getting rattled as U.S. casualties mounted in the early days after the invasion of Iraq.
The drop hit every sector across the market, and a total of $632 billion was lost in total in U.S. stocks yesterday, according to Standard & Poor's Corp.
But analysts who have been expecting a pullback after a huge rally that began last October and sent the Dow to a series of record highs, were unfazed by yesterday's drop.
"This corrective consolidation phase isn't just going to be one day, but we don't believe this is going to be a bear market," said Bob Doll, BlackRock's global chief investment officer of equities.
The broader Standard & Poor's 500 index fell 50.33, or 3.47 percent, yesterday to 1,399.04, and the tech-dominated Nasdaq composite index was off 96.66, or 3.86 percent, at 2,407.86. Both indexes have also turned negative for the year. The Russell 2000 index of smaller companies dropped 31.03, or 3.77 percent, to 792.66.
Bond prices shot higher as investors bought into the safe-haven Treasury market, pushing the yield on the benchmark 10-year Treasury briefly note down to 4.47 percent, its lowest level so far this year, from 4.63 percent late Monday; the yield settled at 4.52 percent.
The durable goods drop raised the chance of the Federal Reserve easing interest rates later in the year -- a possibility that makes the bond market an attractive place to be right now.
The hope for slowing inflation could be dashed, though, if energy costs keep rising. Oil prices initially fell Tuesday, but later rose. Light, sweet crude for April delivery added 7 cents to settle at $61.46 a barrel on the New York Mercantile Exchange.
The dollar slipped against other major currencies, while gold also fell.