Stocks plunge on economic news, oil prices
Just when Americans put aside their fears and started buying stocks again, here come a host of reminders of why they left.
Ominous news from around the world caused stocks to plummet Thursday, sending the Dow Jones industrial average to the worst one-day drop in seven months.
Claims for unemployment insurance rose unexpectedly. A credit-rating agency lowered Spain’s credit grade, amplifying worries that Europe’s debt crisis will worsen. China’s economy showed a surprising sign of weakness — a trade deficit brought on in part by surging oil prices.
And just when markets started bouncing back, Saudi police opened fire on protesters in the eastern city of Qatif, raising concerns about the stability of the oil-rich kingdom. Oil prices swung wildly, and the Dow again dipped below the 12,000 mark.
Major stock indexes had been plodding steadily higher month after month, luring investors back in with gains of 24 percent since August. But Thursday’s steep drop, after a recent roller coaster of market dives, could cause some of them to return to their hiding spots.
“You’ve had people plowing into this market,” said Nicholas Colas, ConvergEx Group chief market strategist. “And nothing makes you take your foot off the accelerator like seeing an accident.”
The Dow Jones industrial average fell 228.48 points, or 1.9 percent, to close at 11,984.61. McDonald’s Corp. was the only stock in the Dow 30 that rose.