Story: "The Dow fell 546.02, or 4.3 percent, to 12,086.06 before recovering some ground in the last hour of trading to close down 415.86, or 3.29 percent, at 12,216.40, according to preliminary calculations. Because the worst of the plunge took place after 2:30 p.m., the New York Stock Exchange's trading limits, designed to halt such precipitous moves, were not activated.
The decline was the Dow's worst since Sept. 17, 2001, the first trading day after the terror attacks, when the blue chips closed down 684.81, or 7.13 percent.
China's stock market plummeted Tuesday from record highs as investors took profits when concerns arose that the Chinese government may try to temper its ballooning economy by raising interest rates again or reducing more of the money available for lending.
"Corrections usually happen because of a catalyst, and this may be it," said Ed Peters, chief investment officer at PanAgora Asset Management. "The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop."
Just a correction of the market. Three months from now, I think we'll be breaking a record again.
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4 comments:
A friend of mine says that most of America's economic strength lies in the stength of the Dollar. What would you say to him?
Palm Boy, I hope you're right. I'm not an expert by any stretch of the imagination, but I don't think that there will be any major collapse until this fall at the earliest, but it all depends on how this Iran situation pans out.
Dyspraxic Fundamentalist, I would disagree with your friend. Other countries are starting to diversify their foreign exchange holdings out of dollars and predominately into Euros, Pounds, and gold. People are starting to lose confidence in the dollar, and as soon as those dollars come flooding back into the U.S., the dollar will go into a free fall and it will become a race to dump dollars. In my opinion, at least, the dollar is one of the U.S. economy’s biggest liabilities, after the national debt.
Matt, I would say the dollar is indeed one of our strengths. We've averaged around 3% inflation yearly for about 30 years now, and that is very stable for an economy of our size.
I think much more of our strength lies with the capitalistic system, and our knowledge base.
Daniel,
I hope we don't have a major collapse, and while Iran is a threat, I have a difficult time beleiving they can cause us significant economic harm.
(seeing as they are not even in the top 15 of the US importers
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html )
No, I was thinking more along the lines of their getting a nuke and bringing it here through Mexico. That would be disastrous. As you know, the markets don't like suprises.
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