Dow's drop recalls market's plunge in March
Not since hitting its gloomy March low has the stock market declined so far so fast.
On Monday, the Dow Jones Industrial Average fell 200 points to close at 8339.01. The 2.4 percent drop marked the index's fifth decline in six trading days and, cumulatively, represents a 460-point drop that's not been seen since the Dow was hitting 12-year lows back in March.
The Dow remains 27 percent above those March lows. Whether the past six days signals the beginning of another large sell-off is, of course, too early to tell. However, some analysts have been warning for weeks that the US stock market's 40 percent rebound from its March lows was too fast.
"Investors will need to see some clearer evidence of economic recovery," wrote Bob Doll, vice Chairman of global asset-manager BlackRock Investments, in a commentary released before Monday's close. "As a result, we believe that last week’s setback in stock prices may have a bit to go as equity markets take a breather from their 40 percent advance over the course of three months."
A key factor behind today's market gloom, which extended to Europe, was a Monday report from the World Bank, which forecast that the world economy would contract 2.9 percent, far more than the 1.7 percent decline the bank had predicted in March.