Dow Jones Industrial Average dropped more than 300 points by mid-day as worldwide financial markets worry about the U.S. credit market. The Dow Jones, as well as the Standard & Poor's 500 and Nasdaq, have lost 10% since July, and a strategist at Absolute Strategy Research tells the Times, "The psychology is shifting notably today. When a market drops by 10 percent, people start to feel it in their portfolios. People are used to stock markets behaving in a non-volatile and even bullish manner.” Trading curbs were even put in place at the NYSE.
Speaking of volatile, the Chicago Board Options Exchange Volatility Index says this is the most volatile period since October 2002. The Federal Reserve injected $17 billion into the system this morning, but, the Wall Street Journal reports, "momentum faded quickly amid the specter of global economic problems." Also, mortgage lender Countrywide tapped its entire $11.5 billion line of credit. This is probably why you haven't seen your friends, neighbors or commuters who work in the finance industry very much lately!
Two quotes from the Wall Street Journal:
"Everything is eroding, and people are just selling and taking profits where they can. Maybe there's some panic selling as well," said Stephen Carl, head trader at Williams Capital. "People have taken money off the table."
"I think we're at a critical level, and it's important that the market holds here," said Ted Weisberg, floor trader at Seaport Securities. "If it trades below this, you're going to start to get rhetoric that we're in a bear market."
Panic AND rhetoric in the midst. And if you're trying to get a loan for a mortgage these days, good luck - even with good salaries and great credit, you may be screwed.
Update: Thanks to an end-of-the-day rally, the stock market erased most of its losses. From Bloomberg: "The S&P 500 advanced 4.57, or 0.3 percent, to 1,411.27. The Dow average lost 15.69, or 0.1 percent, to 12,845.78 after earlier falling 344 points. The Nasdaq Composite Index slipped 7.76, or 0.3 percent, to 2,451.07."
Photograph of New York Stock Exchange traders by Richard Drew/AP