New York – A new wave of fear swept trading floors around the world Friday, resulting in an across-the-board drop in stocks and violent moves in currencies.
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The Dow Jones Industrial Average was off more than 500 points at its intraday low but at the end of trading it was down 312 points to close at 8,378.00
The action underscored how the crisis that has gripped markets since the mid-September meltdown of Lehman Brothers Holdings has defied a tidy ending and led to extraordinary volatility.
The Dow industrials have fallen more than 26% since Lehman’s collapse, and jarring daily point moves of 300 points or more, frequently in the final hour of trading, have become commonplace.
Investors recoiled Friday at fresh signs that economies around the world are beginning to crack. Britain’s economy contracted a worse-than-forecast 0.5% during the third quarter. South Korea’s economy expanded at its weakest pace in four years in the third quarter. Denmark increased the rates on its certificates of deposits by half a point to protect its currency, and Iceland reached a deal for a $2 billion loan from the International Monetary Fund.
Those developments contributed to big drops in major Asian and European indexes, which in turn prompted limit-down moves in pre-market trading of stock-index futures in Chicago on Friday morning. That set a dire tone prior to the opening bell on the New York Stock Exchange.
But the big market downdraft many expected didn’t develop, and though the market has been down all day, selling has been orderly. That’s troubled some traders who hoped that Friday might finally bring the market the sort of all-out cathartic sell-off many say needs to happen before equities can move higher.
“For the first time, I feel nervous,” said Doreen Mogavero, president and chief executive of the New York floor brokerage Mogavero Lee & Co. “Before, I wasn’t nervous. I was concerned. Today, we haven’t seen the volume we were expecting. People are sitting on the sidelines.”
“There just wasn’t enough blood or panic,” said trader Don Bright.