Recession Fears Frighten Wall Street Investors

Wall Street stocks plunged sharply after Friday's opening bell, following huge drops in overseas markets. Currency markets, commodities and bond markets are also volatile. Analysts say investors are worried about a global recession. Part of the problem is that big companies keep reporting that their profits are weaker than expected.

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RENEE MONTAGNE, Host:

This is Morning Edition from NPR News. I'm Renee Montagne.

STEVE INSKEEP, Host:

And I'm Steve Inskeep. Good morning. Here we go again. The Dow Jones industrial average fell more than 400 points in early trading today. It has recovered a little bit since then but this comes from after a disastrous day around the world. Asian markets plummeted. European markets are also down sharply today and we're seeing steep drops in foreign currency markets. Commodities like oil and bonds are especially volatile today. And so we're going to try to catch to all of this with NPR's Jim Zarroli who joins us once again. Jim, good morning.

JIM ZARROLI: Good morning, Steve.

INSKEEP: So what's causing all of these?

ZARROLI: Well, this is getting to be pretty common, isn't it? We're just seeing a real lot of volatility. This began with the overseas markets. Japan's main stock index was down nearly 10 percent. Germany's was down more than 10 percent. And just since then, we've just seen prices fluctuating enormously. Gold is way down, oil is way down just a flight away from everything. Treasury bond yields at the same time are down because people are fleeing into them. U.S. treasury bonds are considered a safe haven in worrisome times, at the same time, we've seen something of a rebound there lately. But overall, it's just been a really volatile day so far.

INSKEEP: And you mentioned, it's kind of hard to even be surprised by these kinds of things anymore but here it is happening gain. And Dow dropped 500 points in the first five minutes?

ZARROLI: Yeah. There was a lot of speculation this morning that we would just see a real crash this morning. One of the reasons was that the Dow Jones industrial average futures fell more than 500 points, and trading had to be suspended. Now, the futures are just basically a way that people judge where the market is going to go before it opens.

INSKEEP: And then place a bet, basically, is what they do.

ZARROLI: Right, right. The market has opened now, we've seen steep drops. The Dow was down 4.7 percent. That's the kind of a drop that would have been extraordinary at one time. But we didn't see just a complete crash that a lot of people were thinking about. Anything can happen later in the day. We've seen stock prices swing a lot lately. This has been a pattern in the stock market especially in the last hour, just prices plummet.

INSKEEP: Has any news come out in the last 24 hours that changes people's overall picture of the economy?

ZARROLI: Well, the problem this week has been that companies keep reporting that their profits were weaker than expected. Amazon cut its profit forecast for instance. We're seeing a lot of the biggest foreign companies saying they're in trouble - Daimler, Sony, Toyota - they've seen a sales decline. We're just seeing more and more signs that we're in just a really serious global recession and it's going to last a long time. Today, we heard that England's economy shrank in the third quarter.

We're supposed to get third quarter GDP figures in this country on Wednesday, and everyone expects to go down. We're also seeing countries like in the developing world in real trouble. Argentina is in danger of defaulting on its debt. Hungary, Ukraine, Belarus are all turning to the International Monetary Fund to raise money. So it's just problems all over the world.

INSKEEP: Jim, I want to check the modifiers in something you just said there because people have accepted, I think, at this point that there's going to be a recession or there's already a recession, but you described it as a "signs of a really serious global recession." Are many economists now signing up to all of those adjectives - really serious and global?

ZARROLI: Well, I think more and more economists are. I mean, of course, it depends on whom you talk to. If you talked to them a few months ago, very few would have said that. But I think that we've just seen a lot of real danger signs lately and it's pervasive. It's all over the world. Even China which has been for a long time considered a growth engine, its economy isn't shrinking, but it has gone down quite a bit. So these problems are really all over the world.

INSKEEP: Jim, thanks very much.

ZARROLI: You're welcome.

INSKEEP: That's NPR's Jim Zarroli keeping us up to date on what's happening on the stock markets today. The Dow, again, down.

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