Investors run for cover as Dow plunges 416 points, worst day since Sept. 2001

Did the Chinese sell off some of our T-bills?

2/27/2007 — Stocks had their worst day since the Sept. 11, 2001, terrorist attacks Tuesday, briefly hurtling the Dow Jones industrials down more than 500 points on a worldwide tide of concern that the U.S. and Chinese economies are stumbling and that share prices have become overinflated.

The steepness of the market's drop, as well as its global breadth, signaled a possible correction after a long period of stable and steadily rising stock markets that had not been shaken by such a volatile day of trading in several years. A 9% slide in Chinese stocks, which came a day after investors sent Shanghai's benchmark index to a record high close, set the tone for U.S. trading.

The Dow began the day falling sharply, and the decline accelerated throughout the course of the session before stocks took a huge plunge in late afternoon as computer-driven sell programs kicked in, and also as a computer glitch caused a delay in the recording of a large number of trades. At one point the Dow was down 546.02 points, or 4.3%, to 12,086.06 before recovering some ground in the last hour of trading to close down 416.02, or 3.3%, at 12,216.24, leaving it in negative territory for the year.

Because the worst of the plunge took place after 2:30 p.m., the New York Stock Exchange's trading limits, designed to halt such precipitous moves, were not activated. The decline was the Dow's worst since Sept. 17, 2001, the first trading day after the terror attacks, when the blue chips closed down 684.81, or 7.1%.

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Shares plummet on China fear
Tuesday, 27 February 2007, Global stock markets slump on fears about China, with New York and London seeing sharp losses.

The sell-off was sparked by a near-9% slide on the Shanghai Composite Index, as investors worried that China may pass rules to limit demand for stocks. The Dow Jones fell more than 500 points at one point, before closing down 416.02 points, or 3.29%, at 12,216.24.

The FTSE 100 closed on a fall of 2.3%, or 148.6 points, to 6,286.1. Elsewhere on Wall Street, the technology-laden Nasdaq index closed down 3.86% at 2,407.87, while the S&P 500 index closed down 3.47% at 1,399.04.

The New York Stock Exchange instituted trading curbs at 1303 EST (1803 GMT) in a bid to stem falls on the US stock market, although the move was not enough to prevent the Dow plunging nearly 300 points in a matter of minutes in late trading. "Foreign companies which are particularly exposed to China have been badly affected" - Peter Dixon, Commerzbank

China stock market slumps

[Martin]

Something isnt right. A group of people appeared to know something deep and indepth and didnt care to share with the rest. As most were stunned from the rapid selling.

Im sure we'll hear more tonight and tommorow. I believe the Asia markets are opening very soon. Will be interesting to see what happens there.

Granny says not to worry, Fearless W watchin' it so it don't get outta hand...

White House Keeping Its Eye on Stock Market
Tue Feb 27, 2007 - The White House is closely monitoring the financial markets following a sharp decline in stocks in the U.S. and worldwide; Treasury's Paulson briefs Bush on market decline

Treasury Secretary Henry Paulson briefed President Bush on Tuesday on the steep decline in the stock market, the White House said. White House spokesman Tony Fratto said Bush got a briefing over the phone from Paulson. He declined to elaborate on the contents of the conversation. "The president's economic advisers are keeping an eye on the markets. We believe that the economic fundamentals in the U.S. economy are sound," Fratto said.

Treasury spokeswoman Brookly McLaughlin said the President's Working Group of Financial Markets was monitoring the markets. "The president's working group regularly monitors markets and will continue to do so," McLaughlin said. The high-level group is made up of the Federal Reserve chairman, Treasury secretary, chairman of the Securities and Exchange Commission and chairman of the Commodity Futures Trading Commission. An administration official said Paulson's briefing for the president came as U.S. financial markets were closing on Tuesday.

The Dow Jones industrial average and the Standard & Poor's 500 Index both closed down more than 3 percent, their biggest one-day percentage drops in almost four years as a sell-off in the Chinese stock market fanned worries that stock valuations may be too high. The Nasdaq suffered its biggest fall since December 2002. Growing anxiety about Iran's nuclear program also fed the brutal reversal of investor optimism.

http://www.reuters.com/article/domes...00704620070227

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Stocks fall again in Asia
28 Feb. 2007 - Shares post modest recovery in China, though

Stock markets plunged across much of Asia for a second day Wednesday amid jitters about a sell-off in China’s stock market and a worries about a possible slowdown in the Chinese and U.S. economies. Shares in Tokyo, Hong Kong, Singapore, Malaysia, Australia, New Zealand, the Philippines and Indonesia all tumbled more than 3 percent in morning trading, following dismal overnight losses on Wall Street, the worst since the Sept. 11, 2001, terrorist attacks.

In China, stocks modestly recovered from their 9 percent plunge Tuesday — their biggest drop in a decade. The Shanghai Composite Index was up 1.2 percent to 2,804.28. But investors in other Asian markets dumped shares Wednesday, with Japan’s Nikkei 225 stock index down 644.85 points, or 3.56 percent, to 17,475.07 points at the close of the morning session.

Hong Kong’s Hang Seng Index was down 3.8 percent, while Australia’s benchmark S&P/ASX200 index shed 3.5 percent. Indonesian shares lost 5.2 percent, while Philippine stocks plunged 9.4 percent. The trouble began Tuesday — just one day after Chinese stocks hit a record — as investors unloaded shares to lock in profits amid speculation about a fresh round of austerity measures from Beijing to slow the nation’s sizzling economy.

More http://www.msnbc.msn.com/id/17371011/

Blame it on a computer...

The glitch: How it made wild ride wilder
2/28/2007 — Wall Street is learning the hard way that machines, like people, are fallible.

Selling by real people on Tuesday triggered the biggest stock market decline in more than five years. But after a computer glitch at Dow Jones Indexes that afternoon made it look like the Dow fell off a cliff in a matter of minutes — sparking fear and confusion — there's no denying that faulty machines in the computer age have the potential to exacerbate violent market gyrations. Wall Street is still buzzing about Tuesday's roller-coaster ride, punctuated by a systems glitch that registered a 177-point Dow plunge in one minute — from down 288 points at 2:59 p.m. ET to down 465 points at 3 p.m., on its way to a 546-point intraday fall.

Here's what happened, according to Dow Jones Indexes. At about 1:50 p.m. Tuesday, a systems problem sparked by heavy trading volume caused the calculation of the Dow to lag behind the actual market decline and the published value of the Dow to understate its actual loss by as much as 190 points. Once the problem was recognized at 3 p.m., officials switched to a backup system. The switch-over resulted in an instant repricing of the Dow, and a decline that had occurred over a 70-minute period appeared to happen in an instant.

Late Wednesday, Dow Jones issued a statement in response to a letter from the House Committee on Financial Services. "We are conducting a detailed review of (Tuesday's) events and do not believe the calculation delay … exacerbated the market decline." The New York Stock Exchange, which recently converted to a hybrid system combining electronic and manual trading, has also grappled with tech glitches this week. It said an overloaded messaging system created a backlog of buy and sell orders and other market data that briefly halted electronic trading on the NYSE floor Tuesday. That forced floor traders to process trades manually.

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The markets: Dow recovers a bit, investors learn
2/28/2007 - Stocks recovered a bit Wednesday from Tuesday's bloodbath, giving investors hope that the two-day selling panic that rattled global markets finally calmed by the time it reached U.S. shores.

After a tumultuous day complete with a 167-point swing, the Dow Jones industrial average closed 52 points higher, erasing an eighth of Tuesday's 416-point loss. The Standard & Poor's 500 and Nasdaq composite indexes also bounced back slightly, posting 0.6% and 0.3% gains, respectively.

Giving investors' the biggest dose of relief was the fact that the Chinese stock market, which triggered the whole mess with its 9% plunge Tuesday, bounced back strongly with a 4% gain Wednesday. "The market is getting a sense of normalcy," says Amo Sahota, currency strategist at HiFX. "There is a sense of calm developing."

Even so, investors now have a brutal reminder that corrections are severe and can come with little warning. Markets in Europe and Asia outside of China were still reeling from the selling, posting losses of 1% to 3%. Domestic markets weren't unscathed. The S&P 500's 2.2% fall in February broke the market's streak of eight-straight months of gains.

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Here we go again - the rollercoaster ride ain't over yet...

U.S. stocks stumble, following European, Asian stocks down
3/1/2007 — U.S. stocks stumbled out of the gate Thursday. The Dow Jones Industrial average dropped almost 200 points before erasing that loss, then turning flat in the early afternoon.

The early plunge ended a one-day reprieve as investors, nervous about the impending release of key economic data, took their cues Thursday from declining overseas markets. The declines in the USA Thursday were mild in percentage terms, but they follow a long stretch of tranquility after a period in which 100-point swings in the Dow were common.

Another series of declines in Asian and European markets set the tone for U.S. trading. The U.K.'s benchmark FTSE 100, France's CAC 40 and Germany's DAX Index all were off 1% to 2%.

Shares in Japan, Australia, Taiwan, Hong Kong, Singapore and Malaysia all retreated mildly, while the Shanghai market — whose plunge Tuesday triggered a global sell-off — fell another 2.9%. Markets in the Philippines, New Zealand, India and Indonesia rebounded.

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Behind the scenes financial problems in China...

China's debtors not paying up
Mar 3, 2007 - A glance at the statistics gives one the impression that China is now an economic superpower, particularly in foreign trade.

China becomes the fourth-largest economy in the world in terms of gross domestic product (GDP) in 2005. It is the world's third-largest exporter after Germany and the United States and is expected to become the world's biggest exporter by 2010. After more than two decades of rapid development, China has become an economic powerhouse, churning out a huge variety of goods and exporting them to countries all over the world, bringing in hard currency to boost the country's economy.

China's trade totaled US$157.36 billion in January, up 30.5% year on year. Imports rose 27.5% to $70.74 billion, and exports increased 33% to $86.62 billion. But for Chinese exporters, the reality might be less rosy than what the figures indicate, as they earn much less than booked, facing overdue or default payment of their overseas receivable accounts.

Although the exact amount of overdue accounts receivable overseas is not known, Han Jiaping, director of the credit-management department under the research institute of the Ministry of Commerce, estimated that China has about $100 billion of accounts receivable overseas and the figure is growing by $15 billion a year. Chinese companies' bad-loan ratio is between 5% and 30%, while the average in developed countries is about 0.25-0.5%, according to the People's Daily Online.

More http://atimes.com/atimes/China_Business/IC03Cb02.html

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Wall Street hit by heavy losses
March 03, 2007 - A FRESH wave of selling hit Wall Street overnight at the end of a horrific week for global markets, as economic jitters resurfaced and traders retrenched ahead of the weekend.

The Dow Jones Industrial Average slid 124.89 points (1.02 per cent) to 12,109.45 at the closing bell, as selling accelerated late in the day. It marked the third day of losses in the past four sessions and followed Tuesday's rout which saw the worst slump since the aftermath of the September 11, 2001 terror attacks. It was the worst week for the blue-chip index in nearly four years.

The tech-rich Nasdaq composite meanwhile slumped 36.21 points (1.51 per cent) to 2,368.00, while the broad-market Standard and Poor's 500 index had lost 16.23 points (1.16 per cent) to a preliminary close at 1,386.94. Market participants said a strengthening yen was feeding unease Friday amid fears it could pinch US hedge funds which have borrowed the Japanese currency at rock-bottom interest rates to fund higher-yielding investments elsewhere.

Concerns also resurfaced about the US housing sector after Countrywide Financial reported delinquencies surged 19 per cent last year while US regulators demanded tougher standards for certain mortgages. Andrew Busch at BMO Capital Markets said investor confidence has been hammered, making a recovery difficult. "When you have the upheaval we did, it's almost impossible for investors to feel confident to do anything but reduce risk," he said.

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Behind China's Market Meltdown
Thursday, Mar. 01, 2007 - The Markets' New Fear Factor

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Roller-coaster rides are not unusual for China's stock markets, which sometimes resemble a casino in Macau. What happened next, however, was decidedly unusual. Investors in New York's equity markets woke up, saw that Shanghai had tanked, and had a collective heart attack: they sent the Dow Jones industrial average down more than 400 points, its biggest single-day drop since Sept. 17, 2001—the first trading session after the terrorist attacks of 9/11. The drop in New York, in turn, fueled fear in markets across Asia the following day, and suddenly investors were seized by visions of a rerun of 1997's "Asian contagion," when a financial crisis in Thailand triggered stock crashes from Jakarta to Moscow to New York. On Feb. 28, as this new outbreak of investor gloom spread, India's main stock index tumbled 4%, Singapore's dropped 3.7%, Japan's fell 2.9%, South Korea's lost 2.6%, and Hong Kong's slipped 2.5%.

This chain reaction plainly demonstrated the increasingly prominent place China now occupies in the minds of global investors. Its extraordinary economic rise has been a key reason for soaring demand for everything from copper to oil to cars, much to the benefit of multinational and Chinese companies alike. But while investors are right about China's economic importance to the world, they're clearly still confused about how to interpret a decline in Chinese stocks. There's little question that the reaction to China's market swoon was overwrought, and that this is not a replay of 1997. Rarely, if ever, has the global economy been stronger than it is now—one reason why so many stock markets have been so healthy for so long. If anything, what the Shanghai shock provided was a reason for investors—finally—to get real: relentlessly rising stock prices virtually everywhere had dulled their sense of risk to the point where "anything—somebody sneezing—could have triggered this," says Sean Darby, head of regional strategy at Nomura International in Hong Kong. "We've ignored risk globally for a long time."

Indeed, before this sudden attack of fear, China's market had risen 11% in just six trading sessions, having already soared an astonishing 130% last year. It was about time for a sharp reminder that what goes up occasionally comes down. That said, many China bulls were soon back in the game: on Feb. 28, much to the doomsayers' surprise, Shanghai's main stock index jumped nearly 4%.

More http://www.time.com/time/magazine/ar...594994,00.html

Sure hope China gets 'well' soon...

China Sneezed — the World Caught a Cold
Monday, 5, March, 2007 - In days not too long ago, there was the saying that when the US markets sneezed, Europe caught a cold.

Now it seems the tables have been turned, but the analogy with China goes only so far, as the US economy seems to be in the early stages of pneumonia. No less a person than the previous Federal Reserve Chairman Alan Greenspan is now openly saying that there could be a recession looming in the US. How Greenspan has changed in his old days since retiring from the Federal Reserve, as in a bygone era one could hardly get a straight word from this man who had moved markets.

Back to China and the recent events which saw the Shanghai stock market shed some 9 percent of its value on “Black Tuesday”, and with world markets “correcting” their bull market rallies of the past year. The Chinese markets fell after it became clear that, following weeks of warning, Chinese officials intended to take administrative action to cool off an overheated stock market, by curbing on illegal traders and introduction of taxes on trading gains. By all indications, Chinese officials seems to have quietly intervened to prop up the domestic share market when the fall came, as Beijing is clear that it wants stability, not volatility in its market.

The Chinese government is still hoping for market gains of some 20 percent-30 percent in 2007 after last years’ 130 percent boom. This puts it into comparison with the miserable returns experienced in the Saudi market and even other key world markets.

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Asian stocks tumble, Hong Kong index sheds nearly 800 points
Monday 5th March, 2007 Big falls were recorded on Asian stock markets Monday, continuing a rout that began last week which has spread to global bourses.

All indices were hard hit. Japan's Nikkei 225 dropped nearly 600 points, Bombay stocks were off nearly 500 points, while Hong Kong fell nearly 800 points. Malaysia's KLSE index was the worst affected, losing nearly 5% of its value. The benchmark index fell 53.99 or 4.64% to 1,110.69.

The Hong Kong Hang Seng lost a hefty 777.13 points or 4% to 18,664.881. Australia's All Ordinaries at 5,642.400 was down 132.800 or 2.30%.

The China Shanghai Composite which sparked the selldown with a 9% one-day drop last week, fell 46.22 or 1.63% to 2,785.306. India's BSE 30 at 12,396.12 was down 490.01 or 3.80%, while the Indonesia Jakarta Composite at 1,698.82 was down 61.199 or 3.48%.

More http://feeds.bignewsnetwork.com/?sid=232081

Europe catchin' a cold too...

Red ink swamps European markets
Monday 5th March, 2007 - Stocks in Europe fell across the board Tuesday in a dismal start to the week.

Investors were concerned at continuing falls in Asian equity markets, and a rapid rise in the yen which has rattled foreign exchange markets. At the close of trading London's FTSE 100 was down 57.50 or 0.94% at 6,058.70.

The German DAX at 6,534.57 was off 68.75 or 1.04%, while the Paris-based CAC 40 finished down 39.67 or 0.73%.

The Swiss SMI at 8,676.86 was down or 21.85 -1.38%. The biggest fall in Europe was in Norway where the OSE All Share dropped 11.955 or 2.40% to 485.461.

http://www.beijingnews.net/story/232197

Domestic problems affecting the domestic market...

Stocks plunge 2% as subprime mortgage woes deepen
13 Mar. 2007 — Stocks plunged Tuesday, driving the Dow Jones industrials down more than 240 points in their second-biggest drop of the year as troubles piled up for subprime lenders.

Investors, bracing for a wilting economy, fled the already deflated subprime mortgage sector on more news that lendersNew Century Financial, Accredited Home Lenders Holding and General Motors Acceptance Corp.'s residential unit are facing financial problems. Bolstering the belief that the struggles are widespread, the Mortgage Bankers Association said new foreclosures surged to an all-time high in the last quarter of 2006.

The Dow fell 242.66, or 2.0%, to 12,075.96. The index is now down more than 710 points, or 5%, from its record close reached Feb. 20, leading many investors to believe that the market's correction is not over. The Dow is still above the low for the year reached March 5 and has yet to slip below the 12,000 level, which it reached for the first time last October.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 28.65, or 2.0%, to 1377.95, and the Nasdaq composite index slid 51.72, or 2.2%, to 2350.57. The subprime lending worries, coupled with anxiety over the Commerce Department's report Tuesday that U.S. retailers eked out a meager 0.1% rise in sales last month, knocked down all three major stock indexes about 2%.

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Late mortgage payments at 3½ year high
Foreclosures at record high in last quarter of 2006, trade group says
March 13, 2007

Late mortgage payments shot up to a 3½-year high in the final quarter of last year and new foreclosures surged to record levels as borrowers with tarnished credit histories had trouble keeping up with monthly payments. The Mortgage Bankers Association, in its quarterly snapshot of the mortgage market released Tuesday, reported the percentage of payments that were 30 or more days past due for all loans tracked jumped to 4.95 percent in the October-to-December quarter.

That marked a sharp rise from the third-quarter’s delinquency rate of 4.67 percent and was the worst showing since the spring of 2003, when the late-payment rate climbed to 4.97 percent. The association’s survey covers 43.5 million loans. The latest snapshot of the mortgage market stoked Wall Street investors’ worries about troubles facing “subprime” lenders who make loans to people with poor credit. The Dow Jones industrials tumbled 242.66 points.

The percentage of mortgages that started the foreclosure process in the final quarter of last year rose to 0.54 percent, a record high. The previous high, 0.50 percent, occurred in the second quarter of 2002 as the economy was recovering from the blows of the 2001 recession. Delinquency and foreclosure rates were considerably higher for higher-risk subprime borrowers, especially those with adjustable-rate mortgages.

More http://www.msnbc.msn.com/id/17593874/