Dow Plunges Over Double Dip Worries

Apparently, getting the debt deal done was not a panacea.

Apparently, getting the debt deal done was not a panacea.

AP (“Stocks plunge as economic, Europe worries continue“):

The stock market is in the midst of its biggest retreat since the financial crisis.

The Dow Jones industrial average plunged as many as 440 points in Thursday afternoon trading. It is now down more than 1,200 points since July 21. The Standard & Poor’s 500 index is down 3 percent, bringing it nearly 11 percent below its recent high of 1,363 reached on April 29.

All three major indexes are down 10 percent or more from their previous highs, a drop-off that is considered to be a market correction. A drop of 20 percent or more signifies the start of a bear market, an extended period of stock declines.

Investors are increasingly concerned about the possibility of another recession in the U.S. and a debt crisis in Europe.

Not shockingly, President Obama’s poll numbers are down with the market. The stock markets had been about the only good economic news in recent months.

FILED UNDER: Economics and Business, Quick Takes, US Politics
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. I’m glad I put almost all my money into a stable value fund 7/15 over concern about the debt ceiling dragging out to the last minute.

  2. Ben Wolf says:

    What a shock! Wall Street has been demanding budget cuts for nearly two years. Now they’ve got it and they realize austerity (and the economic weakness that attends it) has come to America. It’s becoming clear the United States has the stupidest investors on the planet.

  3. Steve Verdon says:

    @Ben Wolf:

    Yeah, things like the declining PCE numbers have absolutely nothing to do with it. And weren’t you channeling Dick Cheney in another thread saying the debt is economically irrelevant?

  4. Liberty60 says:

    Well I am sure that if we just lay off another few thousand gov’t employees, and carve out another round of tax cuts for the 1%, things will turn around!

  5. Ben Wolf says:

    @Steve Verdon: When did I say in this thread that the debt was relevant. I know you’ve been trying to up your right libertarian snark factor, but this isn’t cutting it.

  6. Ben Wolf says:

    Yeah, things like the declining PCE numbers have absolutely nothing to do with it.

    This is the dumbest thing you’ve written all day. What the hell do you think is going to happen with lower government expenditures? PCE will go up???

  7. legion says:

    So, if the Republicans, champions of Wall Street & the Free Market, got practically everything they wanted in the debt negotiations, why is Wall Street sprinting away from them the very next day? Are Republicans really as fiscally stupid as I’ve snarked them for (not that Dems are showing themselves any better right now)? Or did they all just get played by the Invisible Hand?

  8. john personna says:

    I’ve been backpacking for a few days (summited Whitney, yay), and it was funny to come back down and find another crisis in bloom. It almost seemed like “if it’s not one thing, it’s another.”

    As I catch up though, I think this article by Michael Schuman makes the most sense:

    Before we look at where we might be going, let’s take a glance at where we’ve come from. Why are markets tanking? In my opinion, the only thing surprising about the selloff is that some people seem to be surprised by it. The ascent of stock prices earlier this year, especially in the U.S., was detached from the reality of the world economy. Investors seemed to be simply ignoring the constant drumbeat of bad news. Growth in the U.S. has been weaker than expected, unemployment remains stubbornly high and the housing crisis is far from over. The euro zone debt debacle is intensifying, with giants Italy and Spain increasingly under pressure. Inflation has forced emerging markets like China and India to slow down their overheating economies. Oil and food prices, while no longer rising rapidly, are still at elevated levels, eating into consumption spending around the world. The optimism at the beginning of the year about the strength of the recovery was way overblown. We are still suffering from the fallout from the Great Recession. Investors were in denial about the obvious risks. Not anymore. Stock markets are supposed to be forward indicators; today investors are just playing catch up.