U.S. stocks plunge on lending worries, Dow industrials plunge more than 300 points

The Associated PressPublished: July 26, 2007

NEW YORK: Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones industrials closed down more than 310 points after earlier skidding nearly 450.

Investors who had been able for months to largely shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing finally decided it was time to sell after the Commerce Department issued another disappointing home sales report.

Feeding the plunge were concerns that higher corporate borrowing costs will curb the rapid pace of takeovers that had driven stocks higher this year. Investors also feared the sluggish environment for home sales and continued defaults in subprime loans would spur debt defaults and weigh on corporate earnings.

While stocks plummeted, investors poured money into the safe haven of the bond market. The soaring price of Treasurys pulled yields lower, and the rate on the 10-year note plunged to 4.79 percent from late Wednesday's 4.90 percent.

"Worries that have been out there for the past couple of years are coming to a head right now," said investment strategist Edward Yardeni, president of Yardeni Research Inc. "It's show time."

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Thursday's trading was the latest and most extreme in a series of frenetic sessions over the past month - many also accompanied by triple-digit swings in the Dow - as investors sold on worries about the subprime fallout or bought on optimism that there wouldn't be any widespread problems caused by mortgage failures. Many analysts have described the back-and-forth trading as overwrought and based more on gut emotion than careful consideration of market and economic fundamentals.

That was their feeling again Thursday.

"The rally in bonds at this point looks a little bit overdone," said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles. "If you're going to park money temporarily then cash I think is the way to be but I think that we're going to form a bottom. I think people are going to be legging it back into the market."

The Dow plunged 311.50 or 2.26 percent, to 13,473.57 after falling 449.77 in earlier trading. The close was its worst since the 416.02 it lost on Feb. 27, when a drop in the Shanghai stock market rattled world exchanges.

Broader market indicators also slid. The Nasdaq composite index tumbled 48.83, or 1.84 percent, to 2,599.34, while the Standard & Poor's 500 skidded 35.43, or 2.33 percent, to 1,482.66.

The declines triggered a global sell-off in stocks, causing minor losses in Europe to accelerate rapidly along with the Dow's drop. In Europe, Britain's FTSE 100 closed down 3.15 percent, Germany's DAX index dropped 2.39 percent, and France's CAC-40 fell 2.78 percent.

Markets were closed in Asia before the rout got under way.

Wall Street also found more immediate reasons to sell during the session - primarily the home sales figures from the Commerce Department, which further eroded confidence in the housing industry's ability to rebound.

The department reported that sales of new homes fell 6.6 percent last month to a seasonally adjusted annual rate of 834,000 units, more than triple what had been expected and the largest percentage drop since sales fell by 12.7 percent in January.

This boosted anxiety after quarterly results from home builders including Pulte Homes Inc. and D.R. Horton Inc. were squeezed by a sluggish environment from home sales an

probably al qaeda

400 now.

click here for link

The market is not going to "crash". Don't worry that much. The market is at its highest levels adjusted for inflation since the end of the tech boom. Drops in the stock market are good things if you know what you're doing. I can't wait for a decline so I can build up some positions.

down another 150 points as of two minutes ago.

401k is hurting now....

down 200 for the day. probably a good time to sell before it's fully 'corrected' itself, which a buddy of mine said will be around the 11,000 mark.

Originally posted by: Consider Me Dead

down 200 for the day. probably a good time to sell before it's fully 'corrected' itself, which a buddy of mine said will be around the 11,000 mark.

11,000? Are you serious? Don't listen to your buddy. Most analysts say this is a correciton, which means maybe a thousand points followed by a bull market. Even a bear market would have to be pretty fierce to drop to 11,000 from 14,000.

And if you're investing, rather than trading, you should start buying as it drops. Open up a position now, and if it keeps dropping keep buying.

Originally posted by: WhiskeyForBreakfast

Originally posted by:BillyLostin

you should start buying as it drops. Open up a position now, and if it keeps dropping keep buying.

this is why people kill their brokers.

No, people kill their brokers because they buy when the market is up and then the market drops.

I'm not going to argue now, but there's not a successful investor out there who would argue with me that buying after a downturn (consistent companies that have preformed for years) is a good idea.

key word: 'after' a down turn. who says this one is over?

and actually, this just came off the wire:



Asian Stocks Decline to One-Month Low on U.S. Housing Concerns
posted 7-30-2007
By Chen Shiyin and Patrick Rial

(Bloomberg) -- Asian stocks fell, extending a $2.1 trillion rout in global shares, after U.S. housing investment slumped last week and Japan's government suffered an election defeat.

Toyota Motor Corp., the world's largest automaker by market value, and Hon Hai Precision Industry Co., the biggest contract manufacturer, led declines by companies that rely on U.S. sales. Mitsubishi UFJ Financial Group Inc. slipped on concern the ruling Liberal Democratic Party's loss of its upper house majority will hold up legislation in Japan.

``This is not a very happy scenario for the LDP,'' said Yuuki Sakurai, who helps manage $32 billion at Fukoku Mutual Life Insurance Co. in Tokyo. ``We are going to see people buying bonds instead of equities because of subprime concerns.''

The Morgan Stanley Capital International Asia Pacific Index lost 0.4 percent to 153.88 as of 12:10 p.m. in Tokyo, set for its lowest close since June 29. It dropped 3 percent on July 27.

China's CSI 300 Index was headed for a record high after China Life Insurance Co. said first-half profit probably more than doubled from a year ago. Benchmarks also rose in Singapore, Hong Kong and South Korea. They fell elsewhere, with the Philippine Stock Exchange Index slumping 1.8 percent, the region's biggest drop. Thailand's market is closed for a holiday.

The Nikkei 225 Stock Average dropped 1 percent to 17,111.17. Exporters such as Canon Inc. and Nintendo Co. added to the decline after the yen strengthened against the dollar, eroding the value of their overseas sales.

Fuji Electric Holdings Co. slumped after the industrial machinery maker cut its first-half net income forecast by 75 percent. Seiko Epson Corp. plummeted after the world's second- biggest maker of inkjet printers had its rating cut at Credit Suisse.

Toyota, Hon Hai

U.S. shares plunged on July 27 for a second day, sending the Standard & Poor's 500 Index to its worst weekly drop in five years. U.S. residential investment fell at an annual rate of 9.3 percent last quarter, after contracting by 16 percent in the previous three months, the Commerce Department said on July 27.

Consumer spending slowed to an annual 1.3 percent pace, from 3.7 percent in the first quarter, indicating the housing crisis has started to affect consumption habits. The report also showed the U.S. economy expanded by a faster-than-forecast 3.4 percent.

Toyota, which generated more than a third of its sales last year from North America, slid 1.4 percent to 7,160 yen. Hon Hai, which produces iPod music players for Apple Inc., declined 0.8 percent to NT$261.50. James Hardie Industries NV, the biggest supplier of home siding in the U.S., dropped 1.8 percent to A$7.57, extending a six-day, 13 percent slump.

`Damping Effect'

``The housing-market problems may have a bigger-than-expected damping effect on the U.S. economy,'' said Kim Han Jin, vice president of Fides Investment Management in Seoul, which manages $1 billion in equities. ``People want to cut their holdings of riskier assets.''

Macquarie Bank Ltd., Australia's No. 1 investment bank, slid 1.9 percent to A$79.60 on concern the housing slump will end a global boom in takeovers and dent advisory fees. Cadbury Schweppes Plc last week became the first company to delay an acquisition because of ``extreme volatility'' in debt markets.

``Markets, after earnings, were driven by liquidity,'' said Roger Groebli, head of equity research at ABN Amro Private Banking in Singapore. ``Liquidity can disappear. The leveraged buyout market will definitely slow down.''

Mitsubishi UFJ, Japan's largest lender, dropped 1.6 percent to 1.27 million yen. Sumitomo Mitsui Financial Group Inc., the third biggest, lost 1.8

Originally posted by: white trash dirt bag

key word: 'after' a down turn. who says this one is over?

No one does and no one can. Nor can anyone say that we're going to start going up. So you buy on weakness and sell on strength. It's the basis of any money making--buy low and sell high. I'm going to start buying as the market drops and keep buying. That way I get increasingly more shares per dollar. When the market goes back up to a certain point I start selling again.

Market up for the day over 100 points.