Dow Plunges Below 12,000 to 3-Month Low
Stocks fall at the end of a miserable week amid new fears over banks, oil.
June 20, 2008— -- Wall Street continued its roller coaster ride with a big drop today, leaving the Dow Jones industrial average to close below 12,000 points for the first time since March 17.
The blue chip index closed down 220 points today, a 1.8 percent fall, to end the week at 11,842.69. The Dow lost 465 points for the week.
The NASDAQ fell nearly 2.3 percent today and the S&P 500 fell nearly 1.9 percent.
What caused today's big fall?
First, oil prices were back up again, in part because of the Pentagon's contention that Israel had essentially done a dry run earlier this month of an airstrike on Iran's nuclear facilities. Iran is the world's fourth-largest oil producer.
The stock market and oil prices have been trading in a sort of seesaw pattern recently. When the price of oil is up, the market falls, and vice versa.
Another factor was in play, too: It was a summer Friday. (OK, so summer didn't "officially" start until after the market close, but it's close enough.) The Dow has closed down five of the last seven Fridays, including today. Just two Fridays ago, the Dow fell 394 points. The theory is that investors don't want to hold on to their stocks over a weekend when bad news can break, but they can't unload their investments.
The first time the Dow closed above 12,000 was Oct. 19, 2006. The stock market then climbed steadily, with the Dow reaching a record high close of 14,164 Oct. 9.
Then, as the housing and credit markets deteriorated and oil prices started to climb, stocks suffered. In January, the Dow dipped below 12,000 for one day's close. And in March there were four days where it closed below that mark.
Things looked slightly better throughout the spring, with the Dow trading higher.
But the Dow lost nearly 500 points this week as investors once again became worried about the health of the financial sector.
Merrill Lynch today downgraded its outlook for regional banks. But the real news around the investment bank today was rumors that the company might issue a warning about its own profits.