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Dow plunges amid another global sell-off | AAPL, BAC, Stock Market, DOW JONES, MSFT

Nikkei 225 | 09:00 | 0 comments


Hopes that world financial markets had bottomed were dashed Wednesday as worries over Europe's debt crisis infected France and investors focused on a fading outlook for the U.S. economy.

European stock markets plummeted to new two-year lows Wednesday, and sellers swarmed again on Wall Street after a sharp rebound a day earlier. The Dow Jones industrial average sank 519 points, or 4.6 percent, to its lowest level since September, capping another session of extreme swings.

"This is a panic over a lack of growth and a lack of faith in policymakers in Washington and in Europe," said Brian Barish, who heads Denver money manager Cambiar Investors.

Although the U.S. market has suffered periodic setbacks in the past two years as stocks have rallied from their recession lows, many analysts say this decline is different in more than just the severity of losses: Just as during the financial crisis of late 2008, there is no longer a feeling that "buying the dips" will be rewarded.

As investors balk, a deeper decline can become self-fulfilling.

"There is no rush to jump in," said Dan McMahon, a stock trader at Raymond James & Associates in New York. "There's no sense that you're going to miss it if you're patient."

Instead, money continues to pour into the classic havens of U.S. Treasury bonds and gold.

Markets' nerves were frazzled again Wednesday as fears rose that France would be the latest domino to fall in Europe's deepening debt crisis.

Rumors began to circulate that the French government's AAA credit rating might be the next to be cut, following the U.S. downgrade by Standard & Poor's last weekend.

S&P and two other major rating firms all said France's rating was intact. Yet stocks of France's biggest banks plunged on worries about potential losses on their holdings of French bonds and other eurozone government bonds.

Investors also are concerned that France and Germany are facing mounting pressure to increase their bailout assistance to debt-laden eurozone partners. The 17-nation eurozone has already approved bailouts of Greece, Ireland and Portugal, and some experts are calling for a tripling of the current $625 billion rescue fund to help avert possible problems in Italy and Spain.

Though U.S. stocks have fallen hard in the past few weeks, the losses still are relatively modest compared with what has happened in Europe.

France's main market index dived 5.4 percent on Wednesday and now is down nearly 28 percent from its 2011 high. The Spanish market also has fallen 28 percent from its peak, while Italian stocks have crashed 37 percent, including a drop of 6.6 percent on Wednesday.Read More

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