Stocks Have Worst Day Since 9/11 Attacks
Wednesday, February 28, 2007; 1:31 AM
NEW YORK -- Stocks had their worst day of trading since the Sept. 11, 2001, terrorist attacks Tuesday, hurtling the Dow Jones industrials down more than 400 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 that had not been shaken by such a volatile day of trading in several years.
The repercussions continued Wednesday in morning trading in Asia. Shares in Tokyo, Hong Kong, Australia, New Zealand, the Philippines and Indonesia all tumbled more than 3 percent. The region's biggest bourse, the Tokyo Stock Exchange, saw its Nikkei 225 stock index fall 644.85 points, or 3.56 percent, to 17,475.07 points.
Hong Kong's Hang Seng Index dropped 3.8 percent, or 759 points, to 19289.30 after opening. Australia's benchmark S&P/ASX200 index shed 206.9 points, or 3.45 percent, to 5,786.9, while New Zealand's market fell more than 3 percent.
It began with a 9 percent slide in Chinese stocks Tuesday, which came a day after investors sent Shanghai's benchmark index to a record high close, setting 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, and also as a computer glitch caused a delay in the recording of a large number of trades.
The Dow fell 546.20, 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, leaving it in negative territory for the year. 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.
It was the Dow's worst point decline since Sept. 17, 2001, the first trading day after the terror attacks, when the blue chips fell 684.81, or 7.13 percent. In percentage terms, it was the biggest decline since March 24, 2003, when the index fell 3.6 percent as investors started getting rattled as U.S. casualties mounted in the early days after the invasion of Iraq.
The drop hit every sector across the market, and a total of $632 billion was lost in total in U.S. stocks on Tuesday, according to Standard & Poor's Corp. Riskier issues such as small-cap and technology stocks suffered some of the biggest declines, but big industrial companies, those that are often hurt the most in an economic downturn, also were pummeled, with raw materials producers among the hardest hit.
But analysts who have been expecting a pullback after a huge rally that began last October and sent the Dow to a series of record highs, were unfazed by Tuesday's drop.
"This corrective consolidation phase isn't just going to be one day, but we don't believe this is going to be a bear market," said Bob Doll, BlackRock's global chief investment officer of equities.
Some investors also tried to put Tuesday's slide into a longer-term perspective.
"All who invest should feel grateful that we've had a great run for the last 12 to 18 months," said Joel Kleinman, a Washington, D.C. attorney, adding that he has learned to not read too much into any short-term ups and downs. "This is another day in the market."