Fears of a global recession (where are these sudden fears coming from? Why weren’t people afraid of a “global recession” several weeks ago when things were really bad) sent the markets into a tailspin this morning. Dow futures plunged so far down before the market even opened that trading was halted by market circuit breakers until 9:30 a.m. They plunged the maximum allowed limit of 550 points, triggering the “limit down” prohibition on further sales.
Fortunately, things seem to have recovered a bit. There you go; things aren’t that bad.
Within minutes of the 9:30 a.m. market open, the Dow Jones industrial average was down more than 400 points. But that’s about where it stayed for most of the morning, trading in a narrow margin. By 11 a.m., the Dow was down about 300 points.
Today’s drop — the latest in a miserable month for global stock markets — was kicked off by companies reporting on their quarterly earnings…
Japan’s Nikkei stock average fell 9.6 per cent and Hong Kong’s Hang Seng fell 8.3 per cent. In Europe, the picture was just as grim. As of 8:30 a.m. in New York, Great Britain’s FTSE 100 was down 7.4 per cent after the government there said its gross domestic product had fallen 0.5 per cent in the third quarter, putting the country on the brink of recession. Germany’s DAX was down 8.3 per cent and France’s CAC 40 dropped 7.9 per cent.
The S&P 500 and the Nasdaq also both hit their limits, falling 6.6 per cent and 6.2 per cent respectively.
That triggered fears that another set of trading circuit breakers would be hit and halt trading when the markets open.
After the stock market crashes of October 1987 and 1989, the New York Stock Exchange instituted a rule — called Rule 80b — that provided for a stop to trading should there be a rapid and significant drop in the market.
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