NEW YORK – Wall Street suffered one of its worst losses of 2007 on Thursday, leading a global stock-market plunge as investors succumbed to months of worry about the mortgage- and corporate-lending markets. The Dow Jones industrials closed down more than 310 points after earlier skidding nearly 450. Investors who had been able for months to largely shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing finally decided it was time to sell after the Commerce Department issued another disappointing home-sales report. Feeding the plunge were concerns that higher corporate-borrowing costs will curb the rapid pace of takeovers that had driven stocks higher this year. Investors also feared that the sluggish environment for home sales and continued defaults in subprime loans would spur debt defaults and weigh on corporate earnings. Also stunting stocks was the Commerce Department’s disappointing durable-goods report. “The rally in bonds at this point looks a little bit overdone,” said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles. “If you’re going to park money temporarily, then cash, I think, is the way to be, but I think that we’re going to form a bottom. I think people are going to be legging it back into the market.” The Dow plunged 311.50, or 2.26 percent, to 13,473.57 after falling 449.77 in earlier trading. The close was its worst since the 416.02 it lost Feb. 27, when a drop in the Shanghai stock market rattled world exchanges. Broader market indicators also slid. The Nasdaq composite index tumbled 48.83, or 1.84 percent, to 2,599.34, while the Standard & Poor’s 500 skidded 35.43, or 2.33 percent, to 1,482.66. The Russell 2000 index, which reflects the movement of small-company stocks, fell 21.02, or 2.59 percent, to 791.48. Before Thursday’s big drop, the Dow had been up 10.61 percent for the year – and that margin has now been cut to 8.11 percent. The S&P 500 was up 7.04 percent, and the market decline now puts it at a year-to-date gain of 4.54 percent; the Nasdaq’s 9.64 percent increase has been cut to 7.62 percent. The declines triggered a global sell-off in stocks, causing minor losses in Europe to accelerate rapidly along with the Dow’s drop. In Europe, Britain’s FTSE 100 closed down 3.15 percent, Germany’s DAX index dropped 2.39 percent, and France’s CAC-40 fell 2.78 percent. Wall Street also found more immediate reasons to sell during the session – primarily the home-sales figures from the Commerce Department, which further eroded confidence in the housing industry’s ability to rebound. “Wall Street continues to walk a wall of worry,” said Ryan Larson, a senior equity trader at Voyageur Asset Management. “The housing market continues to be a story, and nobody knows when it will rebound. But the real concerns are about credit and oil pushing higher.”160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Though sales of big-ticket items increased by 1.4 percent last month, to a seasonally adjusted $217.07 billion, durable goods, excluding transportation equipment, had an unexpected drop. While stocks plummeted, investors poured money into the safe haven of the bond market. The soaring price of Treasurys pulled yields lower, and the rate on the 10-year note plunged to 4.79 percent from late Wednesday’s 4.90 percent. “Worries that have been out there for the past couple of years are coming to a head right now,” said investment strategist Edward Yardeni, president of Yardeni Research Inc. “It’s showtime.” Thursday’s trading was the latest and most extreme in a series of frenetic sessions over the past month – many also accompanied by triple-digit swings in the Dow – as investors sold on worries about the subprime fallout or bought on optimism that there wouldn’t be any widespread problems caused by mortgage failures. Many analysts have described the back-and-forth trading as overwrought and based more on gut emotion than careful consideration of market and economic fundamentals. That was the feeling again Thursday.
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