MELISSA BLOCK, Host:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
(SOUNDBITE OF BELLS RINGING)
BLOCK: That closing bell couldn't ring soon enough for investors today as the stock market indexes dropped more than four percent and more than wiped out the year's gains. The Dow ended down nearly 513 points, Just since July 21st when the selloff started in earnest, the Dow has fallen more than 1,400 points.
NPR's Tamara Keith has been watching the markets all day. She joins me now. And, Tamara, what was behind this huge drop today?
TAMARA KEITH: Well, there was a lot going on, and it's impossible to pin it down and say, well, this is the one thing that caused investors to sell. But when investors woke up this morning, all the focus was on European sovereign debt. And this time, the worry wasn't just about Ireland and Greece. It was the big guys, too - Italy and Spain. And earlier today, the European Central Bank announced efforts to tamp down those concerns, but investors weren't persuaded.
BLOCK: So that's overseas. What about what's going on closer to home that made investors so pessimistic?
KEITH: Well, they were very much worried about weakness in the U.S. economy. Last Friday, while everyone was focused on the debt ceiling fight, we got some pretty devastating economic news that was sort of overshadowed. Second quarter GDP came in showing the economy had grown at a rate of just 1.3 percent, and more significantly, the government revised down the first quarter growth four - it was just four-tenths of a percent, which is near zero. And this week, we've got more economic data, and it's been disappointing, too, which suddenly has a lot of people using the phrase double dip recession again. I checked in with Ted Weisberg. He's a trader at Seaport Securities, and here's how he described the day.
TED WEISBERG: It's just a combination of all of the events clearly just created an environment where, I think, investors simply said, you know what, you can keep the cheese. Let me out of the trap. I've had enough.
KEITH: Add it all up and the Dow had its worst day since September - or December 2008.
BLOCK: OK. So where are people taking...
(SOUNDBITE OF LAUGHTER)
BLOCK: ...that cheese that Ted Weisberg was referring to, where are people taking their money if they're pulling it out of stocks?
KEITH: Well, they weren't taking it to gold or oil. Both of those commodities, which have been going up, up, up, both came down. Oil was below $90 a barrel. Weisberg told me that today it didn't much matter where investors took their money. The key was just getting it out of the stock market.
WEISBERG: No risk is better than risk. And so whether it's your mattress or the bank or treasuries or whatever it happens to be, the fact is people basically wanted to take money off the table and avoid any risk at all that might come with owning equities.
KEITH: And I will say it appears a lot of people actually fled to U.S. government debt treasuries, and this is obviously a little bit ironic since for weeks we've been talking about whether the U.S. would default as a result of the debt ceiling. But, you know, once again, we see that U.S. debt is often the safest bet in town, or at least that's the way it's seen. And because of the buying of treasuries, yields came down, and that brought down mortgage rates, which is this crazy little silver lining. The 15-year fixed-rate mortgage hit a record low.
BLOCK: Tomorrow, Tamara, we are going to get more economic news. The government's monthly jobs report will be coming out. Worries about what might be in that, did that feed into today's selloff, anticipation of how bad that report might be?
KEITH: Yeah. It's not entirely clear whether investors were trying to get ahead of the report, though often that happens. You know, in the last two months, the employment report has come in well below expectations. In June, the economy created just 18,000 jobs. The unemployment rate rose to 9.2 percent. It was shockingly bad. And economists are - they're expecting better for July, something in the range of 85,000 jobs created, but no one really knows what to expect. So if this report comes in encouraging, markets could rally. And if it comes in discouraging again, you know, it could feed into that funk that was all over Wall Street today that had - and actually has had markets falling for more than a week.
BLOCK: OK. NPR's Tamara Keith. Tamara, thanks very much.
KEITH: Thank you.
Copyright © 2011 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.