A growing tangle of economic and political crises played Wall Street like a yo-yo again as stocks plunged nearly 300 points Friday and then recovered more than 200 by the close.
The Dow Jones industrial average of 30 big-company stocks finished 77.76 points lower at 8,533.65 on Friday, but only after rebounding from a midday deficit of 283 points - the measure's third drop of more than 250 points in as many weeks.At the depths of the selloff, the Dow was down more than 1,000 points, or 10.8 percent, from the record high of 9,337.97 set on July 17. Thanks to the 200-point rebound, however, the Dow avoided finishing the day 10 percent below the peak, a loss usually described as a "correction," and actually finished the week 108.65 points higher.
The suspects blamed for Friday's selloff were familiar, if not predictable, ranging from Asia's never-ending fiscal turmoil to Monica Lewinsky and the uncertain aftermath of the U.S. bombings on suspected terrorist strongholds in Afghanistan and Sudan.
"There's more than enough reasons to be skittish at this point. The whole world is worrying about whether the presidency has become a laughingstock. There's a crisis in Russia, a crisis in Asia. What more do you need?," said Charles White, portfolio manager at Avatar Associates, an investment firm.
"The market has really tried to hang in and fight a brave battle for the last couple of weeks, but there's some real full-fledged panic in the air," said White, noting fears that the Asian mess, which has already contaminated the Russian economy, is now infecting Latin America.
Before trading began Friday, there was word of another major company going bankrupt in Japan. But since most of the other concerns were already on the table during Thursday's 82-point decline, Friday's selling frenzy was largely a delayed reaction.
And just like so many other times over the past year, all it took was another series of sharp declines on foreign markets early Friday to force Wall Street investors to second-guess this week's relative calm.
"It's like watching for Mark McGwire in the morning. You check the news to see how Russia did," said White, referring to the national fixation with the baseball slugger's pursuit of the single-season record for home runs.
Hong Kong stocks fell 3 percent, and Russian share prices fell 5.6 percent to get the ball rolling. In Germany, a major lender to Russia, stocks plunged 5.4 percent, while the main market indexes fell more than 3 percent in London and Paris.
And in Latin America, trading was halted for 30 minutes at the Sao Paulo Stock Exchange in Brazil, South America's largest stock market, when the main index plunged 10 percent.
With all that money fleeing world equity markets, the main beneficiaries once again were U.S. Treasury bonds, which are considered one of the safest investments anywhere. The yield on the 30-year Treasury bond, which goes down as prices go up, dropped below 5.5 percent for the first time in the two decades those securities have been issued.
That yield, used as a benchmark to determine the interest rates charged on many types of loans, reinforced one of the few bright spots on the horizon for Wall Street. Low borrowing costs have fueled consumer borrowing for homes, cars and other products, offsetting the sluggish business conditions that American companies are dealing with overseas.