Transcripts

Recession Worries Spark Another Sell-Off

SUSIE GHARIB: Another massive global sell off today on renewed concerns about a worldwide recession. Stocks in Asia and Europe plummeted, but the losses on Wall Street were less severe. The Dow fell 312 points to its lowest closing level since April 2003. But as Suzanne Pratt reports, some experts who were looking for a bottom were disappointed that the selling in U.S. stocks wasn't worse.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Wall Street pros came to work today expecting a bloodbath for stocks. What they got instead was another nasty sell session. It was one of the many bad days that have come in the last several weeks, as investors process the full effects of a long and deep recession. A major sell off was expected here in the U.S., because investors dumped stocks in many overseas markets earlier in the day. On top of that, before U.S. markets opened, stock index futures were trading down their daily limit, suggesting a rout. NYSE floor trader Teddy Weisberg, says the lack of a catalyst was the reason the stock market did not live up to the dire predictions.

THEODORE WEISBERG, PRESIDENT, SEAPORT SECURITIES: The fact is, other than the normal corporate earnings stuff, there was really nothing out there that would suggest or that would support a major sell off.

PRATT: And though many market pros were encouraged that stocks didn't fall 1,000 points today, others are still clamoring for a day of capitulation. Wachovia Securities Scott Wren says the market desperately needs that before it can move sustainably higher.

SCOTT WREN, SR. EQUITY STRATEGIST, WACHOVIA SECURITIES: I would typically be a believer that hey, we need a big sell off. We need a big rally late in the day. We finish positive or flat on large volume and certainly we haven't seen anything like that really.

PRATT: The spillover of the financial crisis into real economies around the world has meant one of the worst periods ever for stocks. Since the beginning of this year, the Dow has lost an incredible 41 percent of its value, while the S&P 500 and NASDAQ are down by similar amounts. As stocks tumble, demand for safer assets surges. Today was no different. Investors fleeing equities gobbled up Treasuries, sending prices higher and yields lower. Ajay Rajadhyaksha of Barclay's Capital predicts the flight to quality trade will continue.

AJAY RAJADHYAKSHA, HEAD, US FIXED INCOME STRATEGY, BARCLAYS CAPITAL: It's no longer about return on principal, it's all about return of principal. What you care about is getting your money back. Right now, Treasuries are the best place to park your money and that's the attitude many people are going with. You know that you can't lose money on Treasuries.

PRATT: Experts do not expect stock investors to get much of a breather next week. It's a heavy period for corporate earnings and the Fed is meeting on interest rates. On top of that, we'll get our first look at third quarter GDP for a sense of just how bad the economy is doing. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.