Markets Wednesday: Dow sinks, down 10% for the week
NEW YORK -- The global sell-off in stocks raged on Wednesday and Wall Street stocks fell in choppy trading despite a coordinated interest rate cut by central banks around the world designed to boost credit markets and investor confidence.
The Dow Jones industrial average opened lower, rose by more than 100 points by 10 a.m. ET, but was negative again within half an hour. By noon ET, stocks had lost more than 200 points, but by 2 p.m. ET, the index was up more than 125. It fell in the last half-four, ending down 200.
At the close, the Dow was off 189.01, or 2.0%, to 9,258.10. The Dow has now fallen about 35% from the closing high of 14,164.53, reached a year ago Thursday. This week, the Dow has lost 1,067 points, or 10.3%.
Broader indexes were also lower. The Standard & Poor's 500 index lost 11.29, or 1.1%, to 984.94. The Nasdaq composite index fell 14.55, or 0.8%, to 1,740.33.
Meanwhile, oil prices touched their lowest level this year Wednesday as the government reported a huge spike in crude inventories while giving more evidence of dwindling demand.
Light, sweet crude for November delivery fell $1.11 to settle at $88.95 on the New York Mercantile Exchange. Oil at point fell to $86.05 — the lowest price since Dec. 6, 2007.
Crude has now fallen about 40% since surging to a record $147.27 a barrel on July 11.
The stock market volatility came despite a coordinated interest rate cut involving the Federal Reserve and several major European central banks. It also comes one day after the blue-chip index fell more than 500 points to five-year lows. U.S. stocks followed sell-offs in Asia and Europe.
Stocks in Japan plunged 9.4%, its biggest drop in more than two decades, pushing the Nikkei 225 index to a five-year low. Shares in the UK, Germany and France lost 5.2%, 5.9% and 6.3% respectively.
Hong Kong's Hang Seng index dropped 8.2%, shares fell 5.8% in South Korea, 6.9% in Thailand, 6.6% in Singapore, and more than 10% in Indonesia.
Before U.S. markets opened, the Federal Reserve, in concert with the European Central Bank, Bank of England, The Bank of Canada, the Swedish Riksbank and the Swiss National Bank, slashed short-term interest rates. The Fed cut its overnight bank-to-bank lending rate by half of a percentage point, lowering the so-called Fed funds rate to 1.5%. It was the first time banks joined forces to cut rates at the same time in an effort to resuscitate ailing financial markets.
In a statement, the Fed said the credit crunch posed a further threat to the economy, reiterating what chairman Ben Bernanke said Tuesday.
The uncertainty in the market has driven investors to buy up anything deemed safe, including gold and government debt. For instance, prices of gold shot up $22.60 to $904.60 — though still off its record of $1,033.90 in March.
Demand for short-term Treasurys remained high because of their safety; investors are willing to take extremely low returns just to have their money in a secure place. The yield on the three-month Treasury bill, which moves opposite its price, dropped to 0.66% from 0.81% late Tuesday.
