Wall Street suffered its second-biggest plunge of the year Thursday, extending its weeks-long streak of volatility after disappointing home sales figures added to investors’ increasing uneasiness about the mortgage and corporate lending markets. The Dow Jones industrials briefly fell more than 300 points (as of trading hour at 2pm), while Treasury yields plunged as investors moved money from stocks to bonds.
Investors who had been able to shrug off concerns about subprime mortgage lending problems and a more difficult environment for corporate borrowing were clearly worried once again. The Dow’s drop is the biggest since it plummeted 416 points on Feb. 27 after a nearly 10 percent decline in Chinese stock markets.
The anxiety on Thursday increased after the Commerce Department reported that sales of new homes fell 6.6 percent last month to a seasonally adjusted annual rate of 834,000 units, more than triple what had been expected and the largest percentage drop since sales fell by 12.7 percent in January.
Thursday’s trading was the latest in a series of frenetic sessions over the past month – many accompanied by triple-digit swings in the Dow – as investors sold on worries about the subprime fallout or bought on optimism that there wouldn’t be any widespread problems caused by mortgage failures. Many analysts have described the back-and-forth trading as overwrought and based more on gut emotion than careful consideration of market and economic fundamentals.
So, expect the regional markets including Malaysia to open lower when the Friday stock market resumes trading for the last day of the week. The week market definitely pulled down the performance of Apple Inc as most of the indexes are in red. Apple would have performs better if not for the plunge.