MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris.
The stock market turned out to be a much calmer place today. The Dow Jones Industrial Average closed up 50 points, quite a contrast from yesterday when the broader market experienced its biggest losses in five and a half years.
In just few minutes we'll find out more about the computer glitches that gave investors heart attacks yesterday. First, NPR's Jim Zarroli joins us from the New York Stock Exchange.
And Jim, after that rollercoaster ride yesterday, why don't you start by telling us what actually happened today?
JIM ZARROLI: Well, it's been a lot calmer here, obviously, than it was yesterday. The Dow finished up. The NASDAQ composite index also finished up. You know, yesterday, you had every stock in the Dow Jones Industrial Average, all 30 of them, down for the day. Today, most of them were up.
You know, measures of volatility were down. You know, all of the turbulence yesterday was kind of unusual. We haven't had that kind of volatility for a long time. And I think people didn't know what to make of it, so there was this question, you know, was this the start of what we would call a correction or was it an overreaction.
After today, it kind of looks like it might have been an overreaction, though, of course we don't know for sure. There is no big fell off this morning. We saw the foreign markets fall mainly in reaction to yesterday's losses. But, you know, here the major indexes opened higher and they pretty much stayed higher all day.
NORRIS: It's interesting because there were some fairly negative economic data released today, I guess, numbers on gross domestic product and home sales. It seems the markets didn't take notice of that?
ZARROLI: Yeah. In a way, though, I think they did. There was, as you say, an important revision of the GDP for the fourth quarter of 2006. It had been three and a half. It was revised downward to 2.2 percent. Now why should something like that make the stock market happy? The important thing is that it is right about what the market was expecting it to be.
And, you know, the market doesn't like surprises, as we always say. So when there are no surprises, that reassures people. The other thing that happened today was that Ben Bernanke, the chairman of the Federal Reserve, spoke before a congressional committee and he kind of reassured everybody. He said, you know, he saw no material change in his expectations for the economy.
He said there is no lack of liquidity in the stock market, which is very important. He said there are obvious problems in the sub-prime lending market, but there's not any evidence that it's spreading to the broader market. So yesterday, the big drop yesterday was partly because of some comments that Alan Greenspan, the former Fed chairman, made this week in Hong Kong about - he said, you know, it talked about the likelihood of a recession.
A lot of people today say he wasn't really quoted accurately. But Bernanke was able to come in today and reassure people, which I guess, you know, shows you the power of incumbency. I mean, Greenspan - he isn't quite the iconic figure that Greenspan was, Bernanke that is, but he is the guy in charge and that matters.
NORRIS: So should people be reassured? Does this mean that yesterday was actually a fluke and that business is actually back to normal?
ZARROLI: You know, I think it's safe to say there's still a lot of concern about the U.S. economy, where it's headed. You know, we have had a really good run in the United States, and that's been reflected in the stock markets. We've had this long period of stock prices going up, hitting new highs. But what Alan Greenspan said yesterday was, you know, we're starting to see signs of the kinds of imbalances that can lead to a recession.
We have the housing market in continued trouble. We had more evidence of that today, new home sales down 16 points. So there are questions. But I think on the whole, most economists would say that the rest of the economy is strong, that there's just no reason the stock market should see too many days like yesterday.
NORRIS: Thanks, Jim.
ZARROLI: You're welcome.
NORRIS: That was NPR's Jim Zarroli joining us from the New York Stock Exchange.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.