The worldwide stock sell-off kept on rolling Tuesday. Because the markets were closed Monday,
Wall Street is bracing for a wild day today.
When the New York Stock Exchange opened this morning, the market was down more than 464 points, then settled in at a 300 point decline. By 10 a.m., the decline was less than 300. All 30 Dow components were lower. By 10:30 a.m., the drop was 183.
The New York Stock Exchange has trading curbs
that kick in when markets rise or fall too quickly or too sharply.
This morning, the Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point, the biggest one-day move by the central bank in recent memory.
Just before the Fed announcement, Bank of America Corp. and Wachovia Corp. sent another shudder through the markets by announcing their earnings tumbled 95 percent and 98 percent respectively. Both banks cited the lending crisis.
Here is what happened while you slept. And see below for coverage tips.
The Los Angeles Times reports on the Asian markets:
The stock market sell-off in Asia accelerated today, as fears spread of an unavoidable U.S. recession and its effect on the global economy.
"It's clearly indiscriminate panic," said Tim Condon, chief Asia economist for ING Financial Markets in Singapore.
Japan's Nikkei 225 index plunged 5.7 percent, following a 3.9 percent decline a day earlier -- the worst two-day fall in 17 years, according to Moody's Economy.com. Trading in India was halted after markets opened nearly 10 percent lower, finishing down 4.6 percent on top of a loss of 7.4 percent on Monday. Hong Kong's Hang Seng index slid 8.7 percent Tuesday, after falling more than 5 percent the previous day.
Click here for a summary of world markets, including up to-the-minute charts. But keep in mind that many overseas markets have experienced huge growth over the last five years. For them, a big two-day drop is more of a correction than a crash.
These charts tell the story.
The Independent reports on Europe:
Investors experienced a bumpy ride today after London's FTSE (Financial Times Stock Exchange) 100 Index swung wildly in volatile trading.
After a dramatic early 4 percent fall for London's leading shares following yesterday's slump, the Footsie moved back into positive territory as bargain-hunters looked to snap up cheap stocks.
Heavy overnight losses in Asian markets triggered the early sell-off as fears over a U.S. recession shook global exchanges.
But the Footsie -- already trading in a 300-point range today -- could be set for further jolts when U.S. markets open later this afternoon.
CMC Markets analyst James Hughes said: "It's crazy -- it's hard to fathom what is going on. Sometimes when these things happen it is overdone, but the markets can't stand uncertainty and uncertainty is what we've got.
"People are sniffing around the carcasses trying to pick something up but whether they are brave enough to do that in any depth remains to be seen."
A leading German newspaper used the words "hysteria," "avalanche" and "crash" in today's coverage.
In Canada:The TSX (Toronto Stock Exchange) plunged 605 points on Monday -- losing 4.75 percent of its value -- as investors grow increasingly nervous about a U.S. economic downturn and fragile credit markets. The massive sell-off came on top of a six per cent loss last week.
In the Mideast even the markets in oil-rich countries
fell this morning.
What does this mean to you?
For one thing, according to
The New York Times, congressional leaders say they are already rethinking the president's economic stimulus package. Europe is unimpressed, and Congress may need to pump it up. President Bush and lawmakers from both parties are due to meet at 2:40 p.m. (EST) today to discuss a stimulus package.
Journalists should avoid hyperbolic words. Be factual. Words like "crash," "fear," and "crisis" raise emotions and don't illuminate the story. This morning, CNBC used the word "hemorrhage." A headline in Jakarta used the word "bloodbath."
You will hear some "experts" say we are in a "bear market." A bear market is when the market is 20 percent below its high.
Many mutual funds have international investments. For the last year or two -- until now -- they have been doing better than the U.S. market as a whole.
This morning, market officials were trying to calm nervous investors by pointing out this is mostly a credit crisis, not a stock crisis. In other words, they say the underlying value of stocks is still sound.
Keep in mind that foreign banks have been pouring money into the American economy lately. Plunges in their markets will make them less able to continue to invest in the United States.
The New York Times this morning also explains that other countries have problems of their own, including the British housing problems:
Although most of the focus has been on the unwinding of the credit bubble here in the United States, there are problems with bubbles in other parts of the world. Those, too, played a role in Monday's stock market rout.
While Asia has been less buffeted by the credit crisis than Europe, the Bank of China now appears vulnerable, with analysts predicting it will have to write down the value of its American mortgage holdings.
Investors in Asia have been in a state of denial about a possible recession in the United States, said Adrian Mowat, JPMorgan's chief strategist in Asia. But now, he said, many believe "there's no debate about it." The only question, he added is "how long and deep" a recession might be.
In Japan, which may be facing a new recession of its own, most indexes were off Monday by more than 3 percent.
In Europe, the housing market, after a long boom, is cooling off in several countries, notably Britain, Spain and Ireland. That will depress the growth rate in those countries, which are among the region's economic pace-setters.
European banks continue to make unwelcome disclosures about write-downs of mortgage assets, even if the losses are not as dire as those reported by Citigroup or Merrill Lynch. Bank loans across Europe are being constrained, according to a recent survey by the European Central Bank.
