Mike Taylor
The Street
October 22, 2008
Stocks in New York got severely pummeled Wednesday, as a spate of gloomy corporate earnings forecasts offered investors little hope of avoiding a painful global slowdown.
- A d v e r t i s e m e n t
The three major indices spent the entire day in negative territory, but a late-afternoon selloff sent them even deeper into the red. The Dow Jones Industrial Average dropped 514.45 points, or 5.7%, to 8519.21, and the S&P 500 lost 58.26 points, or 6.1%, to 896.79. The Nasdaq stumbled 80.83 points, or 4.8%, to 1615.75. Every one of the Dow’s 30 component stocks registered a loss.
Investors are having difficulty finding sectors that will lead a new rally, wrote Robert Pavlik, chief investment officer at Oaktree Asset Management. He wrote that as traders remain on the sidelines trying to find winners, volume has fallen substantially, causing an increase in volatility. “Because of this uncertainty, it brings into question whether or not we go back and retest the lows of October 10,” he wrote.
In an interview, Pavlik said that fund liquidation could also be responsible for the continued decline in stocks, commodities and other liquid investments that might otherwise be holding up. He said that as the market continues to pull back, fund managers have to raise cash as they face margin calls. “It’s very hard to gauge when the bottom will come from all this.”
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