News Column

Bernanke Comments Clobber Markets; Dow Drops 352

June 21, 2013
stock market

Wall Street suffered through its worst day of the year Thursday, giving investors a dose of reality in a year that has seen the markets hit milestone after milestone.

The Dow Jones index of 30 top stocks nosedived for the second consecutive day Thursday, at one point tumbling by more than 360 points, or nearly 2.4 percent, to close at 14,758.32, one day after the Federal Reserve hinted that it soon may soon tighten the monetary spigots. Disappointing news on China's latest manufacturing statistics also contributed to trader pessimism.

The Dow also fell by more than 200 points, or 1.3 percent, on Wednesday -- making the total losses from both days about 550 points, or just shy of 4 percent.

The broader S&P 500 index, meanwhile, tumbled to 1,588.19, down more than 40 points, or 2.5 percent on the day, while the tech-heavy Nasdaq fell more than 78 points, or 2 percent, to 3,364.64.

The drop came after Fed Chairman Ben S. Bernanke on Wednesday suggested that the Fed may soon start winding down its stimulus program because the markets are strong enough that they no longer need the government's help.

The Fed has been spending $85 billion each month, investing in Treasuries and U.S. equities to keep the economy afloat.

Despite the fall, the losses were far short of a classic correction of a sharp 10 percent drop in a short period of time, and the U.S. markets remain up strongly for the year to date. Before the Fed's announcement Wednesday, Wall Street was up about 15 percent from the beginning of the year. The Dow was trading nearly 17 percent higher than where it started in January, and the S&P was up nearly 16 percent from that point. The Nasdaq was up more than 12 percent.


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Source: Copyright Washington Times (DC) 2013

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