Dow Takes Wild Tumble
China Shock Sparks Plunge Before Modest Recovery
By MADLEN READ
NEW YORK (Feb. 27) – Stocks had their worst day of trading since the Sept. 11, 2001, terrorist attacks Tuesday, briefly hurtling the Dow Jones industrials down more than 500 points on a worldwide tide of concern that the U.S. and Chinese economies are stumbling and that share prices have become overinflated.
The steepness of the market’s drop, as well as its global breadth, signaled a possible correction after a long period of stable and steadily rising stock markets, which had not been shaken by such a volatile day of trading in several years.
A 9 percent slide in Chinese stocks, which came a day after investors sent Shanghai’s benchmark index to a record high close, set the tone for U.S. trading. The Dow began the day falling sharply, and the decline accelerated throughout the course of the session before stocks took a huge plunge in late afternoon as computer-driven sell programs kicked in.
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 416.02, or 3.29 percent, at 12,216.24, 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.
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Is this the start of a major correction in the stock market? What do you think?
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