Steep Sell-Off Spreads Fear to Wall Street 

Dizzied by the turmoil, Wall Street experts agreed on one thing: The jarring day showed that fear had finally returned to markets that had become disconcertingly complacent.

Waves of nervous selling buffeted the stock market in the United States on Wednesday, after a steep sell-off in Europe. At one point, the Dow Jones industrial average had plunged 460 points, or 2.8 percent, though it later swung higher to close down 1.1 percent, or 173.45 points.

“It was a roller coaster, and I think you will have these wild price movements for a few more weeks,” said Peter P. Costa, a top executive at Empire Executions, a trading firm on the floor of the New York Stock Exchange.
Dizzied by the turmoil, Wall Street experts agreed on one thing: The jarring day showed that fear had finally returned to markets that had become disconcertingly complacent.

I think what is good is that it finally felt scary today,” said James W. Paulsen, chief investment strategist at Wells Capital Management. “Prior to today, all the commentary was that this was a refreshing pause, but that’s not what you are going to read tomorrow.”

The steep plunges on Wednesday also signaled something more serious to other analysts and investors. They fear that governments and central banks have failed to anticipate a recent weakening in the global economy — and that policy makers may now struggle to prevent their economies from stalling.

Speaking to investors on Wednesday, Laurence D. Fink, the chief executive of BlackRock, the $4.5 trillion asset management company, underscored the concerns that Europe could sink into recession and the European Central Bank might have limited ability to do anything about it. “Investors are questioning the E.C.B.’s efforts to stabilize the European economy,” Mr. Fink said.

European stocks were particularly hard hit on Wednesday, with Italian shares diving more than 4 percent. The German and French stock markets both fell by nearly 3 percent.
In other markets on Wednesday, the dollar was weaker against most major currencies, while crude oil regained some ground after a slide had the price flirting with $80 a barrel.

Much of the selling in United States stocks, traders said on Wednesday, was driven by hedge funds unloading big holdings in benchmark stocks that for most of the year have had strong returns. With the end of the year approaching and markets falling rapidly, these momentum investors turned tail.

Source: NYT- Steep Sell-Off Spreads Fear to Wall Street

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