Open thread: Wall Street; Update: Dow finishes down — slightly

posted at 9:19 am on October 10, 2008 by Allahpundit
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It’s going to be a long, interesting, excruciating day, so let’s open a thread for chatter. Reading stuff like this and this feels like being told there’s a giant asteroid headed towards Earth and it’s probably going to hit but maybe not, so, you know, cross those fingers. For context:

“The closest I have seen to this in the last 10 to 20 years is the spike after 9/11,” said Richard Chaifetz, chief executive of ComPsych Corp., a Chicago-based company that coordinates mental health referrals for employers. “But this is more geographically dispersed and is not going to get better in a month.”

The Dow’s not the barometer of the underlying problem but it probably is a reasonably fair barometer of public panic, so that’s what we’re watching. The bell rings in 10 minutes. Exit question: Where will it close today?

Update: I’m guilty of this myself: “A second key factor is that some small investors in the US are throwing in the towel. It is thought that a lot of the overnight sell-off on Wall Street was driven by small investors cashing in mutual funds — the US equivalent of unit trusts — and forcing selling by fund managers in order to return cash to investors.”

Update: Down 521 in the first five minutes. Quote:

“We aren’t dealing with a fundamental economic issue any longer,” said James Paulsen, chief investment strategist for Wells Capital Management. “We are dealing with fear. And that doesn’t respond to economic medicine.”

Update: Much-needed optimism from Hugh Hewitt. I’m assuming that the bottom is approaching and that big investors are ready to go bargain hunting, but given that the underlying problem is with liquidity, who’s willing to sink cash back in?

After the first wave of panic selling, 10 minutes after the opening bell, it’s bounced back to -350 from about -700.

Update: In case you’re wondering. I feel faintly dizzy at the realization that we’re at the point of having to talk about this:

The Dow Jones industrial average would have to fall 1,100 points in a day to trigger the first halt [in trading]. Based on Thursday’s Dow close of 8,579, the threshold number to cause the market to stop on Friday would be 7,479. If that point is reached before 2 p.m., the market will shut down for an hour. If the threshold is breached between 2 p.m. and 2:30 p.m., the halt will last 30 minutes. No trading stops would take place if the plunge occurs after 2:30 p.m.

If the index were to fall 2,200 points before 1 p.m., the market would close for two hours. If such a decline took place between 1 p.m. and 2 p.m., there would be a one-hour pause. The market would close for the day if stocks sank to that level after 2 p.m.

In the event of a 3,350-point decline, the market would close for the day, regardless of the time.

It’s actually all the way back up to even at the moment.

Update: Tom Maguire expects a late afternoon rally in anticipation of good news from the G7 summit this weekend. Let’s hope; late afternoons haven’t been kind this week.

If you’re wondering where the bottom is historically for massive corrections, we’re pretty much there. But past results are no predictor of future etc etc etc.

Update: Maguire almost called it. The Dow was down around 450 at 3 p.m. when a monster rally broke and pushed it to +200 about five minutes before the closing bell. Whereupon it promptly dropped hundreds of points again. The exact number’s not set yet but it finished at around -120. Not good, but no crash, thank god.

This weekend’s task: Canned goods!

Blowback

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