Europe Fuels Another Volatile Day On Wall St.

The Dow ended down Wednesday, more than giving back the gains made Tuesday. What drove the selloff? And amid the volatility of recent days, what, if anything, should people do about their retirement accounts?

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MICHELE NORRIS, host: From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host: And I'm Melissa Block. It's happening so often, it's starting to feel routine. I'm talking about another rollercoaster day on Wall Street. The Dow ended down more than 500 points; that more than gives back the gains made yesterday. NPR's Tamara Keith has had the unenviable task of trying to make sense of the markets this week and she joins us again. Tamara, welcome back.

TAMARA KEITH: Thank you though I wish we could stop making a habit of this.

BLOCK: Well, why don't you walk us through the day, Tamara, the arc of what happened on Wall Street today?

KEITH: The best way to describe the day is volatile. If you look at the S&P 500 index, for example, it ended up yesterday, like all of the indices, and then it fell for most of the morning, bouncing up and down a bit. Then, around 2:15 or so, it recovered a bunch of losses and then fell again into the close, ending down more than 4 and a half percent.

There's an index called the Vix from the Chicago Board Options Exchange. It's known as the investors' fear guide. And normally it runs at around 20. Today, it was about double that. I spoke with Marty Kearney. He's at the Chicago Board Options Exchange. He's an instructor there and was a trader for almost 16 years.

MARTY KEARNEY: The volatility doesn't point to higher or lower prices. It's just a measurement of uncertainty and we are in very, very uncertain times. And yesterday, we had a very, very nice rally and the day before we were down sharply and today we're down a little bit. So it is doing what it is supposed to do. It's letting you know that the market is very uncertain as to the direction of the market.

KEITH: And just a sign of how incredibly volatile things were, I spoke with him at 3:15 and he said things were down a little bit. Well, then coming into the close, things were down a lot.

BLOCK: Now, that uncertainty that he was talking about, one of the factors driving that uncertainty today, I gather, was once again European debt.

KEITH: Europe again and again. Earlier in the day there was a rumor that France would have its credit rating cut just like the U.S. had. And that drove a lot of trading, but by the end of the day, that rumor was squashed. You know, U.S. banks took another major hit today, but the losses were pretty much widespread across industries. And once again, investors were fleeing to the safety of U.S. Treasuries.

The 10-year bond sold at the lowest interest rate ever today, below inflation. And my colleague Robert Smith from Planet Money will have more on this later in the show.

BLOCK: Tamara, it's been a while now that we've been talking about how volatile stocks have been and a lot of people, of course, are wondering about their retirement supposed long-term investments, their retirement accounts. What should they do?

KEITH: Well, I spoke to some investment advisors today and they said don't panic. Now, that might be hard to do because it's all very scary these days to see these huge number drops, and gains, and you don't know what's up and what's down. I spoke with Hilary Kramer, she's editor of GameChanger Stocks. It's a newsletter for individual investors. And she says, just hold tight.

HILARY KRAMER: The individual investor shouldn't just sell out and sell off their entire portfolio because so much of what we're struggling with right now is exogenic. It's problems in Europe, in Italy, Spain, Greece...

KEITH: And she says that retirement investing is for the long haul. So if you're in your 20s and your 30s, you've got a lot of time to ride this out. And if you're closer to retirement age, then hopefully your portfolio is more diversified at this point. Maybe you've got some gold, it did well today.

BLOCK: OK. NPR business reporter Tamara Keith. Tamara, thanks very much.

KEITH: Thank you.

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