|Page (1) of 1 - 09/22/11||email article||print page|
By the numbers: a look at what happened in some of the major financial markets on Thursday
Financial markets were whipped Thursday by investors' growing fears that the U.S., and perhaps the rest of the world, is heading for another recession. A look at what happened in some of the major markets:
Investors around the world dumped stocks. The Dow Jones industrial average fell as much as 527 points before closing down 391.01, or 3.5 percent, at 10,733.83. The Dow is down 16 percent from its 2011 high of 12,810.54. It is near its lowest close of the year ' 10,719.94, reached on Aug. 10.
The news was bad around the world. A manufacturing survey suggested that industrial production was slowing in China. FedEx said it is expecting a slowing of the world economy. And investors were still interpreting a statement from the Federal Reserve on Wednesday as indicating a full recovery in the U.S. economy might take years.
U.S. debt was one of the few investments in demand. The yield on the 10-year Treasury fell to 1.71 percent, the lowest since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. That's down from 3.66 percent in February, when the economy was expected to grow in the second half of the year. Bond yields fall when prices rise. Demand for Treasurys is increasing because they are considered among the most stable investments. And the Federal Reserve said Wednesday it will buy $400 billion of long-term notes and bonds. That means there will be fewer of those securities in circulation ' so the smaller supply helps drive prices higher.
Investors also bought short-term Treasury debt. The yields on one-month and three-month Treasury bills had negative yields during Thursday's trading, as they have often in recent weeks. When the yield is negative, investors are paying the government to hold their money. In effect, they're buying safety.
The index known as the stock market's fear gauge rose 11 percent to 41.31. That's below its high close for the year, 48, on Aug. 8. The VIX began the year at 17.75. During the financial crisis of 2008, it closed above 89. When the index rises, it indicates that investors expect stocks to fall over the next month.
The dollar hit an eight-month high against the euro. At one point during trading, a euro was worth only $1.3384. That's a drop of more than 10 percent since May. Traders are buying dollars because they are seen as relatively safe when the global economy slows. The euro, meanwhile, has fallen on fears that Greece or another nation will run out of money, leading to a financial crisis and recession in Europe.
The price of gold fell $66.40, or 3.7 percent, to $1,741.70 an ounce. Analysts said that much of the selling came from big investors who needed to raise cash and who had made money from gold's sharp rise this year. Investors often buy stocks and other securities using borrowed money. When those investments fall, banks or brokerage firms often require additional collateral, a demand known as a margin call. Gold is still up nearly 23 percent this year. But it's down nearly 8 percent from the record close of $1,891.90 it had on Aug. 22.
Silver plummeted $3.89, or 9.6 percent, to $36.57 an ounce. It was the worst drop for silver since Oct. 10, 2008, when it lost 10.7 percent. Like gold, the selling of silver was driven in large part by margin calls. But analysts said that silver had a harder fall because about half of its demand comes from industrial uses. Silver is still up 17.4 percent for the year.
Copper tends to rise and fall along with expectations for the global economy because it's widely used in industry. News that China's manufacturing is shrinking send copper down 7.3 percent to $3.4885 a pound. It is down 23 percent this year.
Oil is another commodity whose fortunes are closely tied to the economy. It fell $5.41, or 6.3 percent, to $80.36 on the New York Mercantile Exchange. It was the worst drop for oil since Aug. 8, when it fell 6.4 percent after Standard and Poor's downgraded the credit rating of the United States. Oil has dropped 29 percent from the closing high of $113.93 it reached on April 29 ' when investors were expecting the economy to keep growing.