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Wall Street's crazy, crazy week

Traders work on the floor of the New York Stock exchange October 10, 2008

TEXT OF INTERVIEW

Kai Ryssdal: How do you start, at the end of a week like this? I guess we start where we began, with a very vocal verdict that the stock market had been given, even today, at virtually every attempt at a rescue plan. And speaking of rescues, this weekend presents a rare, multi-national economic moment. Henry Paulson and six of his closest finance minister friends are going to have a little meeting.

So don't look now gang, but the markets almost broke even today. Our senior business correspondent Bob Moon has been away for a week or so, which means he's well-rested to explain this crazy, crazy market. Tell us hi, Bob.

Bob Moon: Ah, let me catch my breath first Kai.

Ryssdal: Well, while you're doing that, think about what you're going to say when I ask you what was going on this week.

Moon: Well, it was the worst week on record for the S&P 500, Kai. That really tells the story here. But, if you weren't sitting on the edge of your seat watching this minute-by-minute, let me give you an idea of what was happening today. At one point, soon after trading opened, the Dow slid as low as 8 percent, broke below the 8,000 level for the first time since April of 2003, and then we just saw wild lurches back and forth during the day. It was up as high as 250 points, down another hundred point. It closed down 128. The NASDAQ actually managed to close up four points, but it was wild.

Ryssdal: Wild times, obviously. But these gyrations, a little bit out of the norm right?

Moon: Yeah. What we think might have been happening today was all these computerized systems just couldn't keep up with the frenzied volume of sell orders, mostly, and as the system digested all that, we saw the result with these wild lurches.

Ryssdal: All right, here's the payoff question though, what has been driving all the selling? Yes, there's a lack of confidence; yes, people are worried about their retirement funds; but what is making all of this happen now?

Moon: Well, we all seem to want a shot at redemption, Kai. And I mean that in the financial way here. It seems a lot of us scrambled this week to redeem what's left in our mutual funds and in hedge funds, and that means those funds have to turn around and sell huge blocks of stock, which may account for these wild swings that we've been seeing in big, big blocks of stock. Here's one example of just how much has been shifting out of those mutual funds. We checked in today with Conrad Gann, who heads Trim Tabs Investment Research. He's been tracking money out of mutual funds, and the numbers that he's turned up make it abundantly clear that people have reached the point this week of throwing their hands in the air, grabbing the phone and saying get me out of here, show me the money -- just listen to the huge pile of cash that people have pulled out of mutual funds.

Conrad Gann: This week we've lost $43 billion. Two weeks ago that same number was only $6 billion. The week before that it was only $5 billion, so $43 billion in a week in an enormous capitulation.

Moon: And one of the things that may be driving that, Kai, a lot of us are just now getting our quarterly investment statements in the mail and it's really ugly news and that's probably why a lot of us are picking up the phone right now.

Ryssdal: Let me go back to the last word in the piece of tape you played, capitulation. A lot of people have been saying, at some point investors in the market are just going to capitulate -- they're going to surrender and say, OK, now is the time to buy. Is it your sense that perhaps today was a glimmer of it?

Moon: Uh, your guess is as good as mine, Kai. No one can say for sure here. It has always been thus for the stock market, though. When the market sinks so low that people start realizing that a stock is worth the price, or you might say, worth the risk -- that's the most important thing right now -- they decide it's a real bargain. Then and only then will the market start to head back up.

Ryssdal: And just think, we get to do this all over again on Monday, huh? Bob Moon, our senior business correspondent, following the markets for us. Thank you Bob.

Moon: Thanks Kai.

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