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Kai Ryssdal: It might help as we get started to frame the discussion a little. Give some context. At its lowest today the Dow was off 440 points, about 3.5 percent. Basically the same, percentage-wise, for the Nasdaq and the S&P until investors clawed their way back a percent or so.
Now remember, it was one short week ago that it seemed investors were shrugging off problems in the subprime and credit markets. Last Thursday the Dow closed above 14,000 for the first time. There's a word for what's been happening. It's called volatility. And this being a market economy, there's a way to profit from it, too. Think of it as a measure of how jumpy traders are, in a language they understand. The volatility index that trades on the Chicago Board Options Exchange jumped 21 percent today, to its highest level in more than a year. Our senior business correspondent Bob Moon has more on the ups and downs of Wall Street.
BOB MOON: After months of hand-wringing over subprime loan defaults and the tightening credit market, some investors might have been asking, "Why now?" Why did stock market investors choose today to throw in the towel?
Consider the two words that insiders say always rule on Wall Street: Fear and greed. Stock broker Ted Weisberg says both those emotions took over today.
TED WEISBERG: There's been a lot of enthusiasm, a lot of excitement about Dow 14,000, and I think the juices were flowing pretty good. And perhaps the exuberance got a little ahead of itself. With the market at these levels, I guess people just decided they wanted to take some money off the table, and that's exactly what they're doing.
Hugh Johnson is a money manager at Johnson-Illington Advisors. He says the market's been shaken by the stream of worrisome news about housing and private-equity deal-making. But it's hard to say why investors finally gave into their fears.
HUGH JOHNSON: We got to a level that many investors would say was a little pricey or overvalued. That's when you don't need bad news, but unfortunately we now have some bad news.
Analysts disagreed today about how long the market slump might go on. Johnson says it could last a few weeks, or a few months. But given the respectable profit reports Wall Street's been hearing in recent days, he's optimistic investors will get past their fears.
JOHNSON: Although this is a problem — it's a significant problem and there's no question about that — I think we're gonna muddle through, or that we'll put this behind us in short order, and that positive times for both the stock market — maybe not great times, but positive times — for the stock market and the economy lie ahead.
Until then, he says, expect the roller-coaster ride to continue.
In Los Angeles, I'm Bob Moon for Marketplace.