The New York Stock Exchange Tuesday experienced its biggest sell off in over five years, shedding some $600 billion of shareholder value as the Dow Jones Industrial Average lost over 416 points. VOA's Barry Wood has more.
Following a month of steady advances the Dow industrials fell so steeply that all the gains of 2007 were wiped out. Volume was at a record high as the market declined more than at any time since September 2001.
The sell off began in China and moved swiftly to Europe and the Americas. Emerging markets in Africa and Latin America were also hit and the currencies of Turkey, Brazil, and South Africa fell. New York economist Donald Straszheim says a decline in the relatively new and fragile Chinese stock market is unlikely to have an enduring global impact.
"They [the Chinese] are very unsophisticated investors," said Donald Straszheim. "They've panicked, no doubt about that. It [the downturn] may go a while but this is not going to have a lasting economic impact."
China's main stock markets, in Shanghai and Shenzhen fell nine percent Monday after the government announced moves to curb speculative activity.
Stephen Roach, chief economist at the Morgan Stanley investment bank, worries that there may be a longer-term impact.
"One, the Chinese are upping the ante in dealing with what is conceivably an over-heated economy," said Stephen Roach. "And two, there may be a legitimate chance of a spill over effect from the housing shake-out in the U.S."
The U.S. housing market has been weak for several months, with home prices flat or declining. There are worries that the low end of the mortgage loan market is incurring losses that could become even larger.
The burst of the U.S. stock market bubble in 2000 wiped out trillions of dollars in paper wealth.
