Stock traders: Here we go again
Stock traders see the Dow fall 500 points before paring some of its losses. European stock traders endure biggest one-day decline in almost three years.
A stock trader reacts at his desk in front of the DAX board at the Frankfurt stock exchange Aug. 18, 2011. European stock traders saw the biggest one-day sell-off in nearly three years, with Germany's blue-chip index falling 5.4 percent.
Alex Domanski/Reuters
Stocks were off their session lows after European markets closed, but the major averages were still sharply lower across the board following a handful of disappointing economic news and over continuing worries over the stability of European banks.
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The Dow Jones Industrial Average plunged sharply, led by GE and Hewlett-Packard, after squeezing out a small gain in the previous session. The Dow was down almost 530 points in its session low.
The S&P 500 and the tech-heavy Nasdaq also tumbled. The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 30 percent to trade near 41.
All 10 S&P sectors were sharply lower, led by techs and industrials.
"Is this selloff really a surprise? The macro data continues to paint a dire fiscal future for the world—Investors are naïve to think this is a 'rough patch,'" said Todd Schoenberger, managing director of LandColt Trading. "The ingredients are in place for a prolonged period of the bears controlling this market. Investors need to proceed with caution."
Meanwhile, Zahid Siddique, portfolio manager of Gabelli Equity Trust, called today's move "an overreaction."
"We’ve always had these negative issues lingering, but nothing’s particularly new,” said Siddique.
On the economic front, factory activity in the Mid-Atlantic region plunged to minus 30.7 in August, hitting its lowest level since March 2009, according to the Philadelphia Federal Reserve Bank. Economists had expected for a reading of positive 3.7, according to a Reuters survey.
Adding to the woes, sales of existing homes fell 3.5 percent last month to a seasonally adjusted annual rate of 4.67 million homes, according to the National Association of Realtors. The figure is far below the 6 million that economists say must be sold to sustain a healthy housing market.
And earlier, investors were disappointed after the Labor Department reported weekly jobless claims jumped 9,000 to a seasonally adjusted 408,000, the highest in four weeks.
