Stocks Tumble on Self-fulfilling Prophecy Fears
New York, March 12, 2008 -- Worldwide stock markets fell sharply today on fears investors may react negatively to widespread nervousness regarding the potential for a downward market trend. The steep drop during morning trading led to a broad tumble across all major sectors, with panicky investors interpreting the fall as an indication of a setback in investor confidence.
"What we're seeing here is a massive sell-off due to a broad-spectrum belief that the potential for a massive sell-off may be exerting a heavy downward price pressure on equities," Kip Springer, an investment analyst with Merrill Lynch, said today. "That sell-off is exerting a heavy downward price pressure on equities, which may tempt nervous investors to unload their shares sooner rather than later. If so, we can expect markets to move south."
Stocks fell across all major worldwide indexes, with the Dow down 4.3%, Nasdaq down 5.9% and NYSE off 4.1% after the morning session; Asian indexes initiated and are expected to follow the trend, with the NIKKEI 225 down 7.11% and the Hang Seng off 8.22% at close. Futures indicators indicate Asian markets will react negatively to the negative way in which US markets reacted to yesterday's downturn in Asian markets, possibly causing renewed concern in US markets during tomorrow's session, which may put renewed pressure on Asian markets later in the week.
In Venezuela, markets bucked the trend and were steady on reduced inflation concerns with President Hugo Chavez' recent edict declaring live chickens legal tender.
"Chickens are generally considered an inflation-proof safe haven," Mr. Springer said. "The swap makes good sense."
In Europe, major indexes were catatonic as investors, poised to respond to the Asian downturn, stared breathlessly at blinking cursors while they awaited indicators of the extent of the US markets' expected negative response.
"We're stuck in the middle of a global game of push-me-pull-you," Sir Larchwood Findlebunny, head of London-based Findlebunny Funds, said. "Before 1:00 PM, the only food I can get down is gin-soaked olives."
"Barring an unexpected upturn in investor confidence," Mr. Springer said, "we can expect investor confidence to remain low. That will almost certainly result in a continued negative spiral for the market, a spectre that's giving all us investors the major heebie-jeebies."
By Ion Zwitter, Avant News Editor
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