Dow falls almost 1000, recovers 600
By Alexandra Twin, senior writer May 6, 2010: 3:08 PM ET
NEW YORK (CNNMoney.com) -- Stocks selloff sharply Thursday, extending the recent downturn as investors continue to worry about the effects Europe's debt problems can have on the global economic recovery.
The Dow Jones industrial average (INDU) lost as much as 997.21 points in volatile trading. At 3:00 p.m. it was down 410 points, or 3.8%. The Dow's biggest one-day point selloff on a closing basis was Sept. 29, 2008, when it fell 777.68.
The S&P 500 index (SPX) slipped 63 points, or 5.4%. The Nasdaq composite (COMP) dropped 127 points, or 5.3%.
"It's a knee-jerk reaction to the continued problems in Europe, Greece in particular, possibly Portugal, Spain, the U.K.," said Ted Weisberg, NYSE Floor trader, Seaport Securities.
Stocks have been sliding on and off for the last two weeks as investors mull the ramifications of the growing debt crisis in Europe. While European leaders have pledged to provide Greece with $146 billion in loans over the next three years, attempts by the nation to institute certain "austerity" measures to bring down the deficit have sparked riots and other violent outbursts.
Meanwhile, investors are concerned that the size of the bailout will make Europe less able to help Spain, Portugal and other debt-plagued nations. The so-called PIIGS also include Italy and Ireland.
"There's no question that Europe and Greece and specifically the fear of contagion is what's driving the market lower," said Hank Smith, chief investment officer at Haverford Investments.
"Having said that, we also have to be cognizant that the market was due for a pullback at a minimum, and possibly a correction," he said.
He noted that the market hasn't had a correction - technically defined as a selloff of 10% on a closing basis - for at least 14 months.
The euro plunged to a fresh more than one-year low versus the dollar Thursday, pressuring dollar-traded oil prices. Oil prices and energy stocks were also vulnerable in the aftermath of the Gulf oil spill.
A slew of good but not great retail sales reports from the nation's retailers, a report that showed weekly jobless claims dropped were also in focus.
The CBOE Volatility (VIX) index, Wall Street's so-called fear gauge, spiked 21% to a fresh high of 30.19, topping levels not seen since Nov. 4. The VIX is also up over 89% since falling to three-year lows in mid-April.
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