Wall Street stocks are down after erratic day
October 28, 2008
NEW YORK – Wall Street has ended another highly volatile session with a big last-minute loss as the market’s stubborn worries about a protracted economic downturn and tight credit erased budding optimism about a housing sector recovery. The Dow Jones industrial average skidded 203 points to its lowest close in 5 1/2 years, with almost all the decline coming in the last 10 minutes of the session.
The Street’s back-and-forth moves were typical for a turbulent market that has seen many recent rallies evaporate – particularly as hedge and mutual funds sell off even strong assets so they can meet investors’ demands for their money back. These forced sell-offs tend to happen late in the day, when the funds figure out how much cash they’ll need to meet redemptions.
But the market’s anxiety also increases as the closing bell approaches, especially with growing concern about the spread of the financial crisis overseas. News from Asia and Europe tends to break overnight and before trading on Wall Street resumes in the morning.
“We were trading higher earlier on very light volume, but the buyers just couldn’t gather enough momentum to keep it going,” said Alfred E. Goldman, chief market strategist at Wachovia Securities. “When confidence is razor-thin, the nervous tension goes way up, and bam – the sellers take over.”
“It’s just an overall malaise about how bad the economic slump is going to be globally,” he said.