Asian and European Stock Markets Plunge

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Markets around the world dropped dramatically on Monday. In the United States the markets were closed in observance of Martin Luther King Day. Marketplace's John Dimsdale looks ahead to what the domestic market will face when Wall Street opens again on Tuesday.

MADELEINE BRAND, host:

From NPR News this is DAY TO DAY.

We're going to turn back now to the turmoil in the global stock markets. Earlier in the show, we got the international view from NPR's Adam Davidson. And to find out what it means here at home, we're joined by MARKETPLACE'S John Dimsdale.

And John, I guess it's lucky for us and for the markets that there's a holiday today.

JOHN DIMSDALE: Yeah. I'm sure the traders here are welcoming this break, especially if it would just have continued the slide that we've seen over the past few weeks. You know, U.S. indexes - the Dow, NASDAQ, the S&P 500 - are all down between nine and 12 percent since the New Year.

And you got to figure that that's a real vote of no-confidence in either the reassurances from Fed Chairman Ben Bernanke that the Fed is going to keep things under control with interest rate cuts, or in the proposals by President Bush and congressional leaders that they're going to come to the rescue with a fiscal stimulus plan of tax rebates and deductions and spending that could spark some growth in the economy.

On Friday, the Dow slid another half a percent even after press conferences by President Bush other politicians, all vowing to work on a bipartisan plan to put money in people's pockets and give business tax breaks to create jobs. So I guess markets overseas are looking at the sell-off by U.S. investors and saying, well, if they don't have confidence in their domestic leaders, we better not either.

BRAND: And the Dow down nearly 15 percent from last fall's all-time high. And as you say, traders not having a lot of confidence in government proposals. This is all rooted though, right, in the housing crisis?

DIMSDALE: Yeah, absolutely. And the markets think, you know, the government's response has been way to tepid. I hear a lot of grumbling that Ben Bernanke is no Alan Greenspan, he's not a take-charge leader who could have convinced the Fed board to lower interest rates a lot faster, a lot earlier. Bernanke has said that he wants to lead by consensus and be more democratic, inclusive. But Wall Streeters are worried that he's a little too professorial, where they want someone who will dramatically slice interest rates to kick start the economy.

They - they - I also think that the market investors are skeptical that Democrats and Republicans, despite all their assurances that they will work together to come up with a stimulus package, that it's going to be spring or summer before anything can take effect, and by then it could be too late.

BRAND: So in the short term, tomorrow, I guess everyone's expecting a rocky start of the trading week.

DIMSDALE: Yeah, yeah. It certainly looks like that. The drops in Europe and Asia will certainly weigh on U.S. markets who've been thinking - you know, we've been thinking the rest of the world is somewhat immune from the troubles we've been having, but you know, on the other hand, a three-day weekend, a pause in the action can sometimes make traders reconsider what they're looking at. As we always say on MARKETPLACE, consult your own expert before making your investment decisions.

BRAND: And tomorrow is another day. Thank you, John. John Dimsdale of public radio's daily business show MARKETPLACE.

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