Dow falls 400 points in early trading
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Stocks resumed their downward slide in early trading Wednesday as investors retreated from the initial optimism that greeted the Federal Reserve’s decision the day before to keep interest rates low.
The Dow Jones industrial average was down more than 400 points within half an hour of the opening bell and was recently trading down 407.52 points, or 3.6%, at 10,832.25. The broader Standard & Poor’s 500 index was down less sharply.
The slide comes hard on the heels of one of the market’s best recent days. The Dow soared nearly 500 points before the close Tuesday after the Fed announced its intention to keep interest rates low and to consider using additional policy tools to prop up the economy.
The continued whipsawing of stock markets underscores the uncertainty of investors as a growing body of evidence points to a global economic slowdown.
Overnight, stock markets in Asia followed Tuesday’s rally in the United States, but Wednesday morning, European markets have headed down, with the leading French index recently down 3%, and Germany’s leading index down 2%.
Investors had little new economic data to fix on after the Fed’s announcement, but attention appeared to be shifting again from the U.S. economy to the European debt crisis. In addition to the ongoing concerns about Spanish and Italian debt, investors grew more concerned on Wednesday about French government debt. The price of insuring against losses on French debt rose on Wednesday while share prices in French banks fell.
In addition, some investors said that Tuesday’s brief surge gave investors who have wanted to get out of the markets an opportunity to sell.
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-- Nathaniel Popper