The Dow Jones Industrial Average dropped 311.5 points (2.26%) Thursday, its second worst session of the year (in February it fell 416 points in one day), amid investor fears over spiralling subprime mortgage losses, an anemic dollar, and the sudden absence of formerly abundant credit. Intraday lows were 450 points down from Wednesday's close. The Nasdaq fell 1.84%, and the S&P 500 lost 2.33%. While most analysts agree we may not yet have seen the end of the current setback, which has seen the S&P 500 index drop 4.6% over the past week, many were quick to point out that a correction was inevitable. "The basic problem in the market is that we've been up, up and away and needed a correction," said Al Goldman of A.G. Edwards. "I don't think this is going to develop into a 10% correction." From a fundamental standpoint, analysts noted, nothing much has changed. Goldman says there may soon be a buying opportunity: "The best time to buy stocks is when you're least comfortable buying stocks." Others were less optimistic: "It's kind of like catching a falling knife right now," said portfolio manager Edwin Gutierrez of London-based Aberdeen Asset Managers. "I wouldn't be in a hurry to add risk." Portfolio manager Sid Bakst of Robeco Weiss, Peck & Greer said, "As each day has gone by, things have been leaking a bit more, but today there was full-blown carnage." Combined volume on NYSE, Nasdaq, and AMEX exchanges totaled 10.59 billion shares, blowing past the previous volume record by 34%. S&P futures are down 4.75 from Thursday's close as of 7:18 ET.
Sources: MarketWatch, Business Week, Wall Street Journal
Commentary: 2% Market Decline - That's It? • Feeling Vindicated By This Sell-Off - And Looking At Toll Brothers • Suddenly, Investors Can See the Bad News
Stocks/ETFs to watch: SPY, DIA, AGG
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