Shanghai stock market CRASH

[MRT144]

the last time the market was down more than 2% was...

may 15th 2003

[MRT144]

the last time it was more than today's loss was march 24th 2003

[MRT144]

thats the dow. now for the nasdaq

[MRT144]

last time it was off the same or more was july 23rd 2002 and last time more than 2% was may 11th 2006

[Zkribbler]

China doesn't buy a whole lot of stuff from us. So there drop shouldn't have much of an immediate effect on our economy.

The main concern that I have is that the Chinese drop will dry up their excess capital. This will mean, they won't be able to but our debt, which could lead to increased bond prices and increased interest rates, strangling our capital improvements and housing starts.

[DanS]

The S&P closed off 3.47% while the NASDAQ closed off 3.86%.

Pretty big falls.

[DanS]

Originally posted by MRT144
the last time it was more than today's loss was march 24th 2003

For the Dow, it is the worst since September 17, 2001.

[DanS]

From the WSJ...

Stocks Fall on Weak Economic Data,
Geopolitical Woes, Shanghai Tumble
By JOANNA L. OSSINGER
February 27, 2007 5:34 p.m.

Stocks plummeted Tuesday, with the Dow Jones Industrial Average briefly down as much as 546.20 points after a nearly instantaneous drop of about 200 points right around 3:00 p.m. EST. It recovered some of its losses, but still suffered its worst day since Sept. 17, 2001.

The broad selloff was encouraged by a confluence of factors including weakness on the Shanghai market, disappointing durable-goods data and increased uncertainty about Iran and Afghanistan.

The Dow Jones Industrial Average fell 416.02, or 3.3%, to 12216.24, its seventh-largest point decline ever. The Nasdaq Composite Index dropped 96.65, or 3.9%, to 2407.87, with decliners outnumbering gainers by more than 11 to one. The S&P 500 lost 50.33, or 3.9%, to 1399.04. The Nasdaq and S&P also suffered their biggest declines since Sept. 17, 2001, the first day of stock trading after the Sept. 11 terror attacks. The Russell 2000 index of small-capitalization stocks declined 3.8%.

"It's almost like the selling [was] a cascade -- it just started and it just kept going," said Ryan Detrick, analyst at Schaeffer's Investment Research.

The NYSE Composite Index fell 180 points, triggering New York Stock Exchange collars on index-arbitrage trading, at around 1:00 p.m. It ended down 313.12 points, a decline of 3.3%.

"We were ripe" to come off the recent market highs, said Doug Peta, market strategist for J. & W. Seligman. "Everybody has been talking about waiting for a correction."

The sudden, sharp decline by the Dow Jones Industrial Average shortly before 3:00 p.m. was triggered by a tabulation delay by Dow Jones data systems, which calculates the average. There was a temporary lag in calculation of the 30 large-stock average due to a surge in order flows as the market continued to tumble in afternoon trading, much like a clogged pipe. Shortly before 3 p.m., Dow Jones Indexes switched over to a backup system to calculate the average, which nearly instantly registered the huge move.

The glitch wasn't the cause of the decline, but it did cause the drop to register far more quickly than it otherwise would have. Other indexes fell at the same time, but more gradually. Some traders noticed a discrepancy between futures contracts tied to the Dow industrials and the index, which directly tracks the stocks. Usually, the futures contracts closely track the overall average.

"There was a huge disconnect between the Dow futures and the Dow average" of about 200 points, said Brian Williamson, an equity trader at Boston Company Asset Management.

NYSE composite volume set a record, and late in trading, Nasdaq composite volume was closing in on a record.

Shanghai's Composite Index shed nearly 9% -- the biggest decline in a decade -- on what analysts said were widespread efforts by investors to cash in on big gains and avoid any government attempts to cool the markets. "China reminded everyone that there are some risks in the emerging markets," Mr. Peta said. The drop in China's benchmark stock index sent ripples through markets around the world.

Early Tuesday, the Commerce Department said January durable-goods orders fell 7.8% to a seasonally adjusted $203.90 billion. The decline in orders surprised economists, who expected a 3.2% drop. Timothy Rogers, chief economist at Briefing.com, pointed to a decrease in capital-goods orders, "the bread and butter of the manufacturing side," as an area of particular concern. "I think it's just a mid-cycle stall," he added. "The fundamentals are still strong."

Existing-home sales for January rose 3%, the biggest percentage gain in two years, according to data from the National Association of Realtors. Year-over-year, sales were down 4.3% and the median sales price was off 3.1%.

Investors were also concerned about news from Iran and Afghanistan. Iran's foreign minister reportedly said Tuesday that the country would never again suspend its uranium-enrichment program. In Afghanistan, a suicide bomber killed at least three people near the main U.S. military base where Vice President Dick Cheney was visiting. The Taliban claimed responsibility, naming Mr. Cheney as the target of the attack.

All but three Dow stocks declined more than 2%. Alcoa fell 4.7%, Caterpillar was off 3.6%, General Motors declined 5.4% and DuPont lost 3.4%. Boeing contributed significantly to the durable-goods slowdown, but fell a relatively small 2%. Its shares had been declining recently, so some of the negativity might already have been priced into the stock.

The Dow's tech components also took it on the chin, with Intel down 3.9%, AT&T weaker by 3.6%, Verizon Communications 4.6% lower and International Business Machines off 3%. Also, Walt Disney declined 5.7%.

Treasurys were up markedly, as investors sought a safe haven amid the weak economic news, geopolitical tensions and market turmoil.

RadioShack served as a rare bright spot on the day. It reported 65% higher fourth-quarter profit, despite lower revenue, as the bottom line was helped by improved gross margin, lower expenses and reduced interest expenses. The stock rose 12% to $25.18.

Crude-oil prices recovered from an earlier stumble to rise seven cents to $61.46 a barrel.

The Commerce Department is due to report a revision of fourth-quarter gross-domestic product growth on Wednesday for a reading of broader economic health. The preliminary figure was an annualized, inflation-adjusted 3.5%, and economists are expecting it to be revised down at least a full percentage point.

In major market action:

Stocks declined. On the New York Stock Exchange Tuesday, 458 stocks advanced and 2,944 declined on volume of 2.34 billion shares.

Bonds rose. The 10-year Treasury note added 1 11/32, or $13.4375 for every $1,000 invested, yielding 4.513% Tuesday. The 30-year bond was up 2 13/32, yielding 4.631%.

The dollar weakened. The euro was at $1.3242 from $1.3184 at Monday's close. The dollar was at 117.92 yen from 120.57 yen late Monday.

[laurentius]

This isnt really a crash. Not in Shanghai, London or NY.

Maybe its a start for a market correction or slow decline but a crash it isnt. Cash in at Shanghai was not turned into carnage despite fears poor performance by the US markets. Japan is growing strongly, Europe is gaining and India is still hanging there.

I would expect more bad news from Mumbai and Shanghai however. Especially with declining Chinese private consumption we may be looking at a nice bubble in the near future. When that and Indias one bursts in few years, thats a crash.

[MRT144]

Originally posted by DanS


For the Dow, it is the worst since September 17, 2001.

dow is only down by 3.29%

[DanS]

Originally posted by laurentius
This isnt really a crash. Not in Shanghai, London or NY.

It's as close as it will come in Shanghai, given that trading is suspended for the day in individual stocks after a 10% fall.

[DanS]

Originally posted by MRT144
dow is only down by 3.29%

You're right, as a percentage.

[MRT144]

Originally posted by DanS


You're right, as a percentage.

[Zkribbler]

Stock market crashes are social phenomena where external economic events combine with crowd behaviour and psychology in a positive feedback loop that drives investors to sell. Generally speaking, crashes usually occur under the following conditions: a prolonged period of rising stock prices and economic optimism, a market where P/E ratios exceed long-term averages, and extensive use of margin debt and leverage by market participants.

There is no numerically-specific definition of a crash but the term commonly applies to steep double-digit percentage losses in a stock market index over a period of several days. Crashes are often distinguished from bear markets by panic selling and abrupt, dramatic price declines. Bear markets are periods of declining stock market prices that are measured in months or years. While crashes are often associated with bear markets, they do not necessarily go hand in hand. The crash of 1987 for example did not lead to a bear market. Likewise, the Japanese Nikkei bear market of the 1990s occurred over several years without any notable crashes.

[laurentius]

from economist.com?

anyway only the following days will tell if this indeed is a genuine crash.