Dow Sinks 500, Worst Day Since Dec. 2008
Stocks plunged sharply Thursday, with the Dow down more than 500 points, in its worst one-day drop since December 2008.
All three major averages tumbled into negative territory for the year as investors were rattled over an intensifying global economic slowdown and ahead of the widely-followed monthly unemployment report.
We are in a dire situation in this country today, and small publications like this one do not have the huge resources of George Soros pouring in like our liberal friends.
Worth Reading is not funded by the government like NPR.
Worth Reading is not funded by the government like PBS.
Please become a supporting member and help fund this ongoing effort to provide you with news and commentary relevant to our divided nation.
Help us get back our simple conservative values. Remember, the Bigger the Government - the Smaller the citizen!
The Dow Jones Industrial Average plummeted 512.76 points, or 4.31 percent, to close at 11,383.68, led by Alcoa [AA 12.94 -1.32 (-9.26%) ] and BofA [BAC 8.83 -0.71 (-7.44%) ]. The last time the Dow dropped more than 500 points in a single session was in Dec. 2008.
The S&P 500 sank 60.27 points, or 4.78 percent, to end at 1,200.07.
The Nasdaq plunged 136.68 points, or 5.08 percent, to finish at 2556.39.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged more than 35 percent. The last time the VIX closed this high was on July 1, 2010.
Volume was at its highest level this year with the consolidated tape of the NYSE at 7.15 billion shares, while 1.82 billion shares changed hands on the floor.
"We're not steering this bus—it's all coming from Europe," Art Cashin, director of floor operations at UBS Financial Services told CNBC. "We’re hearing reports of funds drawing out of European banks and we’re pretty close to something that might turn ugly."
"It may translate into a strain on the financials system and earnings on the multinationals, which have been carrying the load for Wall Street," Cashin added.
European shares hit a two-year low. The Bank of England and European Central Bank both left rates unchanged, but it did little to improve investor confidence. The ECB signaled it was buying government bonds in response to a deepening European debt crisis.
Investors were also spooked after ECB President Jean-Claude Trichet said "downside risks may have intensified."
"It is true that we are experiencing a high level of uncertainty, not just in the euro zone," he said.
On the economic front, weekly jobless claims were little changed last week, edging down to a seasonally adjusted 400,000, according to the Labor Department.
“The jobless claims number was not too encouraging … we need to see more of a significant improvement than the data just squeaking by,” said Doreen Mogavero, president and CEO of Mogavero Lee & Company.
The claims news comes ahead of Friday's government non-farm payroll data, which likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June. The unemployment rate is expected to hold steady at 9.2 percent.
“We’ve reduced our equity exposure by half at the end of the second quarter,” said Rob Stein, portfolio manager and senior economist of Astor Asset Management. “We’ll need to see the economic data stabilize.”
Adding to day's woes, JPMorgan [JPM 37.92 -1.98 (-4.96%) ] cut its third-quarter U.S. economic growth forecast by 1 percent, pointing to recent developments in the U.S. economy. The firm added that it doesn't expect the Fed to raise interest rates until at least 2013.
The dollar soared against a basket of currencies. The greenback's surge came amid a weakening economic outlook and moves by Japan to intervene in the forex market to bolster the yen.
Meanwhile, gold reversed its gains, trading below $1,653 an ounce as investors opted for cash to cover losses outside of the bullion market amid deepening losses on Wall Street.
Bank of NY Mellon [BK 23.72 -0.93 (-3.77%) ] announced it will start charging "large depositors" to hold cash due to a sudden increase in dollar deposits prompted by fears among its customers.
All 10 S&P sectors were trading lower, led by energy, materials and industrials.
Oil prices tumbled, with U.S. light, sweet crude crashing through technical support of $86.25 a barrel, its lowest level since February. London Brent crude fell below $109. Major oil giants ExxonMobil [XOM 73.84 -3.88 (-4.99%) ] and Chevron [CVX 96.84 -5.92 (-5.76%) ] tumbled.
Among earnings, GM [GM 25.99 -1.18 (-4.34%) ] fell even after after the automaker posted earnings that nearly doubled, as the firm a larger share of sales globally and raised prices on its vehicles.
Kraft Foods [KFT 33.78 -0.52 (-1.52%) ] earnings beat estimates, raised its guidance and announced it will split in two. Major investor Nelson Peltz said he is excited about the split and has been increasing his stake in the firm. Berkshire Hathaway is also one of Kraft's biggest shareholders.
AIG [AIG 26.40 -1.79 (-6.35%) ] and Sunoco [SUN 35.89 -3.02 (-7.76%) ] are expected to post earnings after-the-bell tonight.
U.S. warehouse club operator Costco [COST 76.51 -0.57 (-0.74%) ] posted a better-than-expected chain-store sales, helped by higher gas prices and strengthening foreign currencies. Teen-oriented chains Hot Topic [HOTT 7.20 -0.27 (-3.61%) ] and Wet Seal [WTSLA 4.54 -0.29 (-6%) ] blew past estimates, but rival Zumiez [ZUMZ 21.77 -5.33 (-19.67%) ] missed expectations.
Dendreon [DNDN 11.69 -24.15 (-67.38%) ] plunged over 60 percent after the drugmaker abandoned its forecast for its prostate cancer vaccine Provenge and said it plans to cut jobs to reduce costs.
Obama celebrates 50th birthday at White House
After spending the morning of his milestone birthday working in the Oval Office, the president headed to the Blue Room of the White House for a celebration with top aides. White House chefs were spotted cooking chicken and burgers on outdoor grills.
Later, Obama was celebrating with family and friends, including some who came in from his hometown of Chicago, in the Rose Garden. The president's oldest daughter, Malia, also made it home from summer camp in time to celebrate her dad's 50th.
Even on her husband's birthday, Michelle Obama couldn't resist poking fun at his graying hair. In a campaign email - subject line "Gray Hairs" - the first lady asked supporters to sign an electronic birthday card for the president, and said she knows the reason for his salt-and-pepper hair.
"I see Barack make choices he knows will affect every American family. That's no small task for anyone - and more proof that he's earning every last one of those gray hairs," Mrs. Obama wrote.
The president himself has approached his big birthday with a sense of humor.
"By the time I wake up, I'll have an email from AARP asking me to call President Obama and tell him to protect Medicare," he said during a fundraiser in Chicago on the eve of his birthday.
Obama was free to travel to Chicago Wednesday for the birthday-themed fundraisers after reaching a deal with Republicans earlier in the week to raise the nation's debt ceiling and avert a calamitous government default.
With the cloud of uncertainty that surrounded the debt debate now lifted, Obama had a wide smile on his face for much of the night, especially as musicians Jennifer Hudson, Herbie Hancock and the band OK Go, along with the crowd of about 2,400 gathered at Chicago's historic Aragon Ballroom, sang "Happy Birthday."
During a video conference with some of the more than 1,000 birthday-theme house parties his supporters held coast-to-coast Wednesday night, Obama got another serenade from a group in North Carolina, while supporters in Ohio held up signs wishing the president a happy 50th.
An administration official said the Obamas will pay for the president's birthday party at the White House. The Obama family will cap their birthday celebrations with a weekend trip to Camp David, the presidential retreat in Maryland.
Obama was born Aug. 4, 1961, near the end of the baby boom years of 1946-64. He's the third U.S. president who belongs to the baby boom generation, a population of more than 76 million. Bill Clinton was the first, followed by George W. Bush.
