Jittery over fresh fears of a global recession, investors held their version of a clearance sale yesterday, hawking nearly everything they held at bargain prices — and sending the Dow into a 391-point tailspin.
“It was nothing more in my mind than recession fears,” said Joseph LaVorgna, an economist with Deutsche Bank, adding “we’re at a crossroads.”
And as with any clearance sale, prices dropped to lure buyers.
* Stocks plunged for the second straight day, sending the Dow Jones industrial average down 3.5 percent, to 10,734. At one point, the Dow was down 500 points and 19 stocks had lost value for every one that gained value.
* Oil prices, a barometer of global economic health, dropped more than 6 percent to $80.51 per barrel.
* Gold broke its winning streak yesterday, although it is still up 22 percent this year, by dropping $66, or 4 percent, to $1,741.70 an ounce.
* Silver, a precious metal coveted for industrial production, fell 9.6 percent to $36.58 an ounce.
* Even wheat and soy took a hit, with corn dropping 5.2 percent to $6.50 a bushel.
As the market plunged, President Obama pushed his $447 billion jobs bill in front of an aging bridge connecting Ohio and Kentucky.
“Help us put this country back to work. Pass this jobs bill right away,” he exhorted.
The only assets that weren’t discounted in crazy trading yesterday were super-safe securities like the US dollar and Treasury bills, suggesting investors are moving their cash into reliable havens.
“Only two positions are working in this market: cash and fetal,” quipped Mark Dow, portfolio manager of New York’s Pharo Management.
The yield on 10-year Treasury notes fell to record low levels as investors rushed to buy them. Yields, an indication of risk, fall as demand and prices for them rise
In addition to being a safe haven, investors also rushed to Treasury bills in anticipation of the $400 billion buying spree by the nation’s central bank.
In good news for Americans, mortgages are starting to look even cheaper. Rates on the 30-year fixed dropped to 3.74 percent from 3.92 percent yesterday, according to Zillow Inc.
The move suggests plans by the Fed to lower borrowing costs on long-term loans is already starting to have an effect.