Wall Street suffered its second-biggest plunge of the year Thursday, leading global markets lower as investors fled stocks amid increasing uneasiness about the mortgage and corporate lending markets. The Dow Jones industrials fell more than 350 points, while Treasury yields plunged as investors moved money into bonds.
Investors who had been able to shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing appeared to finally succumb to those concerns. The Dow's drop is the biggest since it plummeted 416 points on Feb. 27 after a nearly 10 percent decline in Chinese stock markets.

Feeding the selling were concerns that higher corporate borrowing costs will curb the rapid pace of takeovers that have driven major indexes this year. Investors also feared the sluggish environment for home sales and continued defaults in subprime loans would spur debt defaults and weigh on corporate earnings.

"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 show time."

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Filed under: * Economics, Politics • Economy

1. Irenaeus wrote: This drop is healthy. July 26, 6:21 pm | [comment link]

2. Katherine wrote: Yup, Irenaeus.  It goes up, it goes down.  The long-term trend is what counts, not short-term swings.  I bought bond funds last month rather than invest in stocks at historic highs. July 26, 9:31 pm | [comment link]

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