Dow Plunges Amid Europe Lending Worries
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The Dow plunged Thursday amid buzz in the market that European banks have halted lending.
One trader, on the condition of anonymity, said he heard fixed income desks in Europe shut down early because there was no liquidity — basically European banks are halting lending right now.
"This is similar to what took place pre-Lehman Brothers," the trader said.
The Dow was down more than 900 points at one point, or more than 8 percent, before pulling back to the 600-700 point range.
Under current, New York Stock Exchange rules, if the market falls ten percent or more between 2:30 and 3:00 pm ET, trading is halted for 30 minutes.
The S&P 500 and Nasdaq were also sharply lower. The CBOE volatility index, widely considered the best gauge of fear in the market, was above 35, or up more than 40 percent. The VIX ended last week around 22.
This comes after the Dow and the S&P 500 suffered their biggest two-day declines since Feb. 3-4, while the Nasdaq saw its biggest two-day decline since August of 2009 on Tuesday and Wednesday. Market gains for the year have been cut to about 4 percent across the board.
Market sentiment turned negative very quickly in recent session, Steve Starker, co-founder of BTIG, which specializes in institutional trading, said on CNBC this morning.
The market "may have a little bit more room on the upside," Starker said, but even if Friday's jobs report beats expectations, "every rally seems fadable right now," he said.
From: A P Abraham <abrahamap@airtelmai
To: sharetrading@
Sent: Tue, May 4, 2010 7:53:16 AM
Subject: [sharetrading] US markets
US markets has made terrific support at 10900 region. So if that is broken we are going into bear land, till then it is only EUPHORIA and manna…..
Sugar is indicating a form of consolidation…… One may hold on………… 14.8 cents has not been retested, which is a good sign…..
How Indian markets will fare is a question with RIL/RNRL dispute. But I guess another index heavy weight will be the new star. Watch out for the new king…..
Like US I guess 5160 can be considered a solid support for India . So be long with this a s SL.
Abe
Happy Trading,
United we grow!!!
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