The turmoil on Wall Street showed no signs of letting up today, as fears about the slowing global economy once again sent oil and stock prices tumbling.
The Dow Jones industrial average was down more than 500 points, a drop of 3.5 percent, at a little after noon ET, though it later rebounded somewhat and ended the day down 249 points. Meanwhile, oil fell below $27 a barrel, a 12-year low.
Both the Dow and the Standard & Poor's 500 index have now lost more than 10 percent of their value since the start of the year. Globally, the stock markets have lost $3.6 trillion in value, according to The Wall Street Journal.
The S&P even fell below the lows it reached last August, following China's decision to devalue its currency.
Among the biggest losers was IBM, which fell nearly 5 percent after a disappointing earnings report.
On the whole, however, there didn't seem to be any immediate cause for the latest plunge, just a continuation of the fears and anxiety that have gripped investors for weeks.
"There are economic factors, but today doesn't feel like it's economic. It feels emotional," said Mark Zandi, chief economist at Moody's Analytics, in an interview with NPR. He called the sell-off "cathartic."
"I think investors have seen the declines and they've gotten to the point where they're just nervous, maybe a bit panicked, and you get this broad-based selling. It's very uncomfortable, but it happens. The markets at times are wildly euphoric and other times they're taken over by abject pessimism.
"This is one of those days when people say, 'I want out' and they're getting out. And it doesn't really matter what they own and what the long-term fundamentals are and how good those companies are or what their prospects are. That's totally irrelevant on a day like today. It's just, 'I want out. I've seen my portfolio fall 10, 15 percent in value. It's time for me to cash in my chips.' And this is the day they're cashing in."
Stephen Schwarzman, CEO of the Blackstone Group, told Bloomberg News that "there are a lot of things behind the selloff."
"You have economic things such as the slowing of the U.S. economy, which has been pretty gradual," he says. "You've got energy going down so quickly that you can almost get windburn. You've got China as an issue which is probably overdone. So when you put those factors together you have an unattractive brew along with the concern the Federal Reserve will raise rates and slow the economy further."
As stock prices tumbled, investors put their money in the usual safe havens, buying gold, the Japanese yen and U.S. Treasury debt. The yield on the 10-year Treasury note fell below 2 percent, which is generally considered a key psychological milestone for investors.
ROBERT SIEGEL, HOST:
I'm Robert Siegel. Even by recent standards, it was a nerve-wracking day on Wall Street. Stocks were down sharply throughout the day. By the time trading ended, they did recover a lot of that lost ground, though. That wasn't the case for oil prices. They fell to their lowest levels since 2003. NPR's Jim Zarroli spent his day watching the market's fluctuation. Hi, Jim.
JIM ZARROLI, BYLINE: Hi.
SIEGEL: Take us through what happened today.
ZARROLI: You know, it was a day like we've seen a lot this month - everybody kind of running for the exits. It's sort of like dominoes falling. You know, we had a big selloff in Asia, then in Europe, then in the United States. At one point in the day, a little bit after noon, maybe, the Dow was down 566 points, which - that's, you know, 3-and-a-half percent - had a lot of energy stocks in particular just getting clobbered. That has everything to do with the way oil price have been coming down. And yeah, as the afternoon wore on, you saw a recovery in stocks, but the Dow still finished down 200 - almost 250 points.
SIEGEL: And is there any particular reason that people think stocks went down so much today?
ZARROLI: Not really. I mean, there were individual stocks like IBM that were down because of earnings. But by and large, you know, people are just looking at what's happening around the world and feeling scared about the economy. I spoke to Mark Zandi, who's the chief economist at Moody's Analytics. He believes this is just based on emotion.
MARK ZANDI: I think it's cathartic. I think investors have seen the declines and have gotten to the point where they're just nervous, maybe a bit panicked, and you get this broad-based selling.
ZARROLI: Zandi says, you know, there are times when euphoria sweeps the markets and everybody buys. And you know, there are times like right now - periods of pessimism, and people sell.
SIEGEL: Jim, is there any evidence one way or another what impact the drop in oil prices is having on the economy?
ZARROLI: Well, you know, a drop in oil prices is a big problem. Of course, if you're an oil producer - very hard to make a profit when prices are down around $27 a barrel. And of course, the longer this goes on, the more trouble it will be for companies. You know, but energy is not as important to the U.S. economy as it is to other places like, you know, Canada or Nigeria or Russia. We do a lot of oil production, but when you look at, you know, the sheer size of the U.S. economy, oil just isn't the kind of factor that it is in other places. Now, Americans do consume a lot of oil, of course, and this drop in prices means people save a lot of money.
SIEGEL: All right. Yeah, people are saving money on gasoline, on home heating oil in the Northeast, also on jet fuel. That sounds like it should be a plus for the economy.
ZARROLI: Yeah, it is. It - of course, it puts a lot of money in people's pockets. That's money they can consume on a - you know, spend on other things. And you know, consumer spending in general in the United States is holding up pretty well right now, which is one of the reasons why people are sort of surprised by what's happening in the stock market.
You know, for all the problems that the U.S. economy has had, it has some real strengths right now. Now, what the market is responding to is what's happening overseas. I mean, we're seeing this slowing growth in China. That's having an impact on, you know, lots of commodity producing countries like Russia, like Brazil, even like, you know, Australian and Canada. Eventually, you know, that's going to have some kind of impact on the United States if things get bad enough. It's just, you know - it's not clear what kind of impact. It's not clear when it will happen, and you know, that's one of the reasons why the stock market is acting so volatile right now.
SIEGEL: That's NPR's Jim Zarroli in New York. Thanks, Jim.
ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.