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10A – Daily News – Friday, May 21, 2010 Stocks dive, Dow off 376 on world economic worries Wall Street NEW YORK (AP) — Stocks took their deepest plunge in more than a year Thursday as fears grew that Europe’s debt crisis could spread around the world and undermine the U.S. eco- nomic recovery. The possi- bility has been brewing for weeks, but analysts said some investors are just wak- ing up to it. The Dow Jones industri- al average fell 376 points, its biggest point drop since February 2009. All the major indexes were down well over 3 percent and are now showing losses for 2010. Interest rates fell sharply in the Treasury mar- ket as investors once again sought the safety of U.S. government debt. The number of people applying for unemployment benefits last week rose unexpectedly and the Greek government’s response to its debt crisis sparked new protests in Athens, but ana- lysts said neither event appeared to set off Thurs- day’s selling. They said more investors seemed to be grasping the possibility that the U.S. recovery could be in jeop- ardy, and that many were realizing that the stock mar- ket’s big rebound since March 2009 may not have been justified. ‘‘The economic recovery story has started to look like a mirage,’’ said Tom Samuels, manager of the Palantir Fund in Houston. ‘‘If that’s correct, stock prices are well ahead of eco- nomic reality.’’ Investors are concerned that the debt problems in countries like Greece and Portugal will spill over to GRADUATION 2010 A special page featuring this year’s graduates! From kindergarten to college. Congratulate your special graduate! THIS WILL APPEAR IN THE D NEWSAILY RED BLUFF TEHAMACOUNTY Saturday, June 5th Deadline: Friday, May 28th $18 2 or more $ your graduates photo Congratulations To our favorite Graduate of 2010 Have a wonderful future. Jane Doe Best Wishes RED BLUFF TOTAL COST ea. 12 ea. 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Tehama Tire Service Inc. 525 Antelope Blvd. Red Bluff (530) 527-5272 * other countries in Europe, cause a cascade of losses for big banks and in turn halt economic recovery in the U.S. and elsewhere. ‘‘It’s starting to look like one of these tragic stories were one person falls through the ice, then every- one else rushes in to help and ends up drowning,’’ independent market analyst Edward Yardeni said. They’re also worried that China might take steps that will limit its economic growth, which would also affect the U.S. recovery. Analysts said the market is vulnerable to rumors about any of the major economies right now. The Standard & Poor’s 500 was down almost 12 percent from its closing high for the year, which was reached April 23. Most ana- lysts consider a drop of more than 10 percent from a recent high to be a ‘‘correc- tion.’’ This is the market’s first correction since stock indexes hit a 12-year low in LOSE WEIGHT Nutrition & Energy Digestive Cleansing Weight Control POUNDS INCHES& Healthy, real results! LOSE 30-day product, return refund guarantee. Ask for. 888-564-2079 herbal-nutrition.net/ starhomebusiness starhomebusiness@att.net March last year. The fact it has occurred in just 19 trad- ing days shows how anxious traders are right now. The Chicago Board Options Exchange’s Volatil- ity Index — known as the market’s fear gauge — leaped almost 30 percent to its highest level since March 2009. The increase in the VIX signals that traders are bracing for more drops in the market. The VIX closed at 45.79, nearly three times its 2010 low of 15.73, reached April 20. But it’s about half of the record high of 89 it reached in October 2008 at the height of the financial crisis. Analysts said traders were retreating from any investment thought to be too dangerous to own right now. That has meant heavy sell- ing in stocks, commodities and troubled currencies like the euro. Investors appear increas- ingly convinced that Euro- pean countries will need to adopt stringent spending cuts to pay down their heavy debt loads, Yardeni said. Such cuts would likely lead to long economic slumps for those countries, a prospect that investors may now be accepting as reality as they sell stocks and the euro, the currency shared by 16 Euro- pean nations, he said. The euro, a key indicator of confidence in Europe’s economy, managed to rise to $1.2491 in late afternoon trading, a day after hitting $1.2146, a four-year low. The euro began the year at $1.4325. ‘‘The drop in the euro is the initial phase of a long- term, multiyear economic decline in Europe,’’ Yardeni said. ‘‘It shows a declining confidence in the workabili- ty of the EU (European Union) monetary union, and that’s why their stock mar- kets are down.’’ The Dow has fallen 1,137 points, or 10.2 per- cent, since hitting its 2010 high April 26. It has fallen by at least 100 points in nine of the 19 trading days since its peak. Now Available Organic & Heirloom Spring Vegetable Plants 1 1/2 miles South of Red Bluff 12645 Hwy 99E (530) 529-2546 PAID POLITICAL ADVERTISEMENT Gayle’s 100% Cotton Summer Sleep Wear at 649 Main Street Downtown Red Bluff The Dow fell 376.36, or 3.6 percent, to 10,068.01. The S&P 500 fell 43.46, or 3.9 percent, to 1,071.59. The drop was the worst for the Dow since February 2009, and the S&P’s worst since April 2009. All of the 30 Dow stocks fell, while 497 of the 500 S&P stocks closed lower. The Nasdaq composite index fell 94.36, or 4.1 per- cent, to 2,204.01, its largest percentage drop since Feb- ruary. At the New York Stock Exchange, only 153 stocks rose compared with 2,994 that fell. Volume came to a heavy 2.1 billion shares. Bank of America Corp. had the biggest percentage drop in the Dow. It fell $3.25, or 6.3 percent, to $15.28. Sears Holdings Corp. had the worst percentage drop in the S&P 500, falling $10.86, or 10.9 percent, to $88.70 after reporting first-quarter earn- ings. The dour market got some confirmation from a Federal Reserve official that Europe’s problems could be a ‘‘potentially serious set- back.’’ Fed Gov. Daniel Tarullo said that if the debt crisis curbed lending and the flow of credit globally, that would endanger both the U.S. and global recoveries. ‘‘Although we view such a development as unlikely, the swoon in global finan- cial markets earlier this month suggests it is not out of the question,’’ he said in prepared remarks. A private research group, meanwhile, reported an unexpected drop in its index of leading economic indica- tors, a sign that growth could slow this summer. The Conference Board’s index of future economic activity slipped in April for the first drop since the stock market’s bottom last year. As investors pulled out of stocks and other risky investments like commodi- ties, they moved into safer investments such as U.S. Treasurys. The yield on the benchmark 10-year Trea- sury note, which moves opposite its price, fell to 3.22 percent from 3.37 percent. SAMPLE! FREE Elect