It was a bad day for all the major indexes today. It was one of the biggest drops this year. The worries over the subprime lending market along with other issues caused a big hit to the stock market…
Investors who had been able for months to largely shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing finally decided it was time to sell after the Commerce Department issued another disappointing home sales report.
Feeding the plunge were concerns that higher corporate borrowing costs will curb the rapid pace of takeovers that had driven stocks higher this year. Investors also feared the sluggish environment for home sales and continued defaults in subprime loans would spur debt defaults and weigh on corporate earnings.
“Worries that have been out there for the past couple of years are coming to a head right now,” said investment strategist Edward Yardeni, president of Yardeni Research Inc. “It's show time.”
The Dow plunged 311.50 or 2.3%, to 13,473.57 after falling 449.77 in earlier trading. The close was its worst since the 416.02 it lost on Feb. 27, when a drop in the Shanghai stock market rattled world exchanges.
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