Dow Jones Industrial Average Closes Down 520 Points, Ninth Worst Point-Loss Ever

Dow Jones Closes Down More Than 520 Points, Ninth Worst Point-Loss Ever

For the third time in less than a week, the Dow Jones Industrial Average closed down more than 500 points. This time, the Dow dropped a total of 520 points, or 4.63 percent, closing at 10,718, according to Reuters. That makes it the ninth-worst single-day drop in the history of the Dow Jones.

In the last week, the Dow Jones has now experienced drops of 513 points, 520 points and 634 points.

On Tuesday, the Dow Jones experienced a significant gain, rising by 429 points.

From Stan Choe of the Associated Press:

Wall Street focused Wednesday on the bleak landscape ahead for the economy and sold off, wiping out the big gains from a day earlier and then some. The selling was intensified by worries about debt problems in Europe. The Dow Jones industrial average closed down 519.83 points.

On Tuesday, the Federal Reserve said it planned to keep interest rates ultra-low for two more years. After some initial confusion, the stock market staged a huge comeback and had one of its best days.

But the interest-rate news proved to be a distraction. The Fed made the pledge because it sees almost no chance that the economy will improve substantially by 2013, and when investors focused on that, they dumped stocks again.

"Now it gets back to the fundamentals," said Mark Lamkin, founder of Lamkin Wealth Management, which manages $215 million.

The Dow closed at 10,719.94, down 4.6 percent for the day. By points, it was the ninth-steepest decline for the market. The Dow has lost more than 2,000 points in less than three weeks.

Wednesday was another day marked by big moves on the stock market. The Dow was down more than 300 points within minutes of the opening bell. It recovered some of that loss, then drifted steadily lower in the last two hours.

The market has traded that way for two weeks, lurching up and down. The most extreme example was Tuesday, when the Dow swung more than 600 points from a loss of 205 points to a gain of 429 points in the one hour and 45 minutes after the Fed's statement.

The stomach-churning highs and lows are reminiscent of the fall of 2008, the depths of the financial crisis, when swings of 800 or even 1,000 points in day were not unheard of.

The S&P 500 finished the day down 51.77 points, or 4.4 percent, to 1,120.76. The Nasdaq composite index is down 101.47 points, or 4.1 percent, to 2,381.05.

Gold rose above $1,800 per ounce for the first time as more money poured into investments considered safe at a volatile time for the financial markets. Gold closed up, $41.30, to $1,784.30 per ounce. Just 10 days ago, gold was $1621.70 per ounce.

The 10-year Treasury note, which has also served as a haven, also rose sharply. Its yield fell to 2.11 percent from 2.26 percent late Tuesday. It had reached a record low of 2.03 percent on Tuesday. A bond's yield falls when its price rises.

Investors have bought U.S. government debt even after S&P stripped the United States of its top credit rating, AAA, late last week.

On top of concerns about the U.S. economy, Wall Street's attention is still on Europe. Investors there are worried that Italy and Spain may be the next countries unable to repay their debts.

The European financial system has been battered by fears about banks' holdings of bonds issued by heavily indebted countries such as Greece and Portugal. This week, there have been additional concerns about banks' exposure to other banks.

"It's the same game of Old Maid playing out in Europe that was played out here during the subprime mortgage crisis," said Quincy Krosby, an economist and market strategist with Prudential Financial.

In Asia, the concern is that higher inflation in China could lead to slower growth. China, Brazil and other less-developed countries have provided the strongest economic growth since the world began to recover from recession in 2009.

----

AP Business Writers Bernard Condon, Matthew Craft, Sarah DiLorenzo and Daniel Wagner contributed to this report.

Popular in the Community

Close

What's Hot