(New York) The US stock market plummeted today, with the Dow Jones industrials falling nearly 550 points before a slight rebound cut the one-day freefall to a 416 point drop. Wall Street was part of a global market selloff - initiated by a 9 percent drop in the Chinese stock exchange overnight - fueled by growing concerns that the American and Chinese economies are cooling and that equities are overpriced.
The sudden plunge wiped out about $600 billion in market value and erased all of the market gains in 2007, and the losses were the worst since the post-September 11 market slide.
The Dow fell 546.02, or 4.3 percent, to 12,086.06 before regaining ground in the last hour of the day to close down 415.86, or 3.29 percent, at 12,216.40.
The bloodbath was preceded by Commerce Department projections showing a 7.8 percent drop in orders of durable goods, while nondefense goods orders had showed the largest monthly drop on record. The industrial decline was led by an 18 percent drop in the transportation sector, especially in orders for commercial jetliners and in auto manufacturing.
Oddly, gold also fell nearly one percent today, reflecting sentiments that the metal was also overpriced.
"The weakness in world stock markets is probably a double edged sword for gold. On the one hand, falling stock prices should make gold more attractive as a store of value and safe haven," said a representative of Dresdner Kleinwort Wasserstein. "As gold rose also on hopes of stronger physical buying from China, the collapsing stock market there might also reduce the potential demand for gold from China."
A sampling of global markets shows that the US is not alone in its market jitters. Argentina's MERV index fell 7.49 percent, while the Brazilian Bovespa was off 6.62%.
I shudder to look at my own portfolios after this ugly day. Perhaps I will open a good book and wait until the markets improve.
Assuming, of course, that they DO improve...