Capitalists Fear Stock Markets Haven't Hit Bottom

Bail Out the People Movement march on Wall Street against the financial crisis of capitalism. The demonstration was held on April 3, 2009. (Photo: Alan Pollock), a photo by Pan-African News Wire File Photos on Flickr.

Investors fear stock markets haven't hit bottom

Dayton Business Journal - by DBJ Staff
Thursday, August 4, 2011, 9:56pm EDT

The stock markets posted some of the worst drops in years Thursday as investors' fears over a slowing global economy sparked a sell-off on Wall Street.

With the Dow Jones Industrial Average down 513 points on Thursday, it capped off a two week run of bad days that have left the major Blue Chip stock index down 1,341 points since July 21.

The Dow closing down 512.76 points to 11,383.68 will rank as one of the Top 10 worst single-day point drops in the stock index's history, and has left many financial experts asking if the worst is yet to come.

Some analysts are questioning whether Wall Street's expectations for corporate earnings for the third quarter are too high and may have to be pulled back. If that happens, it could be a wave of negative news that drives stocks down lower.

Bruce McCain, chief investment strategist at Key Private Bank, told MarketWatch that investors are worried about how to "get out of this roller coaster of the relentless onslaught of bad news."

"We're just worrying ourselves to death," McCain told the online news site.

Bill Stone, chief investment strategist at PNC Financial Services Group, told the Associated Press that investors continue to be bombarded by worries about the global economy.

And Sam Stovall, chief investment strategist at Standard & Poor’s, told the New York Times that stock markets are now in correction mode, and that there could be "another couple of weeks to go before it bottoms."

While the Dow plummeted more than 500 points in one day, the S&P 500 dropped 60.27 points, or 4.8 percent, to close just a fraction above 1,200. The tech-heavy Nasdaq was down 136.68 points, or 5 percent, to close at 2,556.39.

Commodities also were hit by the fears of a second recession as the economy weakens, and oil dropped 6 percent to close at $87 per barrel after having traded around the $100 mark in the past few months.

And stocks overseas took a beating Thursday night, with Japan's Nikkei average and Hong Kong's Hang Seng both opening nearly 5 percent lower.

As for the Dow, it had reached 12,724 on July 21 and an all-time high close of 14,164 on Oct. 9, 2007. It has closed lower 10 of the past 11 days and on Thursday all 30 of the component stocks declined. The best-performing Dow stock Thursday was Kraft Foods Inc., which was down nearly 4 percent.

Even companies that reported solid earnings have taken hits. General Motors reported profit doubled to $2.5 billion in the most recent quarter, but its stock was down 4 percent Thursday, in part because the automaker said it sees the rest of the year slowing a bit from previous expectations.

Teradata Corp., with its headquarters just south of Dayton in Miami Township, also had strong earnings growth but its stock price declined slightly on the day.

Alcoa Inc. posted the biggest decline of the day for Dow component stocks, with a loss of 9.2 percent. Bank of America was next with a 7.4 percent decline and Caterpillar Inc. had a 6.99 percent drop. All three of those companies have operations in the Dayton region.

Other Dow stocks that took a hit of more than 5 percent for the day include General Electric, Hewlett-Packard, Boeing Co. and Chevron Corp.

For Dayton-based stocks, AK Steel Holding had the largest decline at 14.3 percent on the day, while Thor Industries was down 7.4 percent and Robbins & Myers was down 4.5 percent.

Other stocks of companies with large operations in Dayton that took a hit were Fifth Third Bancorp, down 6.35 percent; Huntington Bancshares, down 7 percent; Citigroup Inc., down 6.5 percent; JPMorgan Chase & Co., down 5 percent; and AES Corp. -- which is buying DPL Inc. -- down 8 percent.