somehow i don't think is sustainable

U.S. stocks plunge in a global sell-off prompted by huge selling in China. The Dow briefly shows a 545-point loss thanks to overwhelmed Wall Street computers.

Stocks suffered their worst losses since just after the Sept. 11, 2001, terror attacks, prompted by a huge sell-off in China's stock market, higher oil prices and some disappointing economic news.

The Dow Jones industrials, briefly down as much as 545 points, finished the day off 416 points, or nearly 3.3%, to 12,217. The Nasdaq Composite Index plunged more than 96 points, or 3.9%, to 2,408, and the Standard & Poor's 500 Index tumbled about 50 points, 3.44%, to just under 1,400, its lowest in nearly three months.

The market decline wiped out all of the year's gains for the Dow and the S&P 500.

The sell-off was compounded when computers controlling orders to the New York Stock Exchange couldn't keep up with the record volume. And the computers used to tabulate the Dow also couldn't keep up.

The decline was the biggest point loss for the Dow since Sept. 20, 2001, when the blue-chip index fell 383 points, or 4.4%, to 8,376. The biggest point loss ever -- nearly 685 points -- occurred three days earlier, when markets reopened after terrorists flew airliners into the twin towers of the World Trade Center and the Pentagon. The Nasdaq's point loss was its biggest since it fell 116 points on Sept. 17, 2001, the day the markets reopened.

The Dow's loss was also the biggest percentage decline since the index fell 3.67% on March 24, 2003 -- just before the United States invaded Iraq.

The selling produced the biggest volume ever on the New York Stock Exchange -- about 2.3 billion shares. Down volume on the NYSE was 2.2 billion shares. Volume on Nasdaq hit a record 2.78 billion shares.

All 30 stocks in the Dow were lower, along with 498 stocks in the S&P 500. The only winners: RadioShack (RSH, news, msgs), up nearly 12% to $25.13, and Questar (STR, news, msgs), up 1.44% to $82.95.

Walt Disney (DIS, news, msgs) was the Dow's biggest loser, down nearly 5.7% to $32.05. The Dow stock that declined least was General Electric (GE, news, msgs), down 1.9% at $34.66.

The big sell-off in China was started the day's selling, but it was just one of several forces that combined to hit the markets:

An overbought stock market. The stock market had gone more than four and a half years without a correction of 10% or more.

Higher oil prices. Crude oil jumped 32 cents a barrel to $61.46. So far in February, crude is up 5.44% after a big sell-off in January. The Dow Jones Transportation Index ($TRAN) fell 3.4% today and has fallen more than 6% since hitting a record 5,178 a week ago.

Concern about housing and subprime lenders. Traders are obsessed about how deep the housing slump that began last year will go and how vulnerable lenders are if large numbers of mortgages go bad. One result: big brokers and banks have been pummeled. Goldman Sachs (GS, news, msgs)fell 6.7% to $199.76 today. Lehman Brothers (LEH, news, msgs)was off 4.7% to $74.19.

Alan Greenspan. The former Federal Reserve Chairman said yesterday that the U.S. economy faced a risk of a recession later this year. "When you get this far away from a recession, invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said via satellite link to a business conference in Hong Kong. Greenspan didn't say a recession was imminent, but traders didn't care.

Disappointing economic news. Here the culprit was a report that new orders for durable goods plunged 7.8% in January, more than the 5.5% drop expected by economists. Durable goods rose a revised 2.8% in December. A big drop in airplane orders at Boeing (BA, news, msgs) was the biggest contributor, but even without Boeing, orders had fallen 3.1% last month, the biggest drop since July 2005. Boeing was off 1.9% today.

Disappointing results from some key retailers. In this case, blame Nordstrom (JWN, news, msgs), the upscale chain, which offered guidance about first-quarter earnings that were lower than Wall Street was expecting. The stock was down 7.6% today to $52.30.


Is this the correction?
It could be, and it has been long expected by many on Wall Street. Yet, technically the market is slightly less than half-way to a correction, which is defined as a pullback of 10% in a major average.

The Dow has now fallen nearly 4.5% since hitting a closing high of 12,786.64 on Feb. 20. At the time, it was up more than 19% from lows of last July. The Nasdaq jumped nearly 24% 2,524.94 last Tursday from its July lows. It's is down 4.6% since.

The market decline may continue for several days before a bottom sets in perhaps early next week, many traders said. But many money managers and traders insisted the sell-off was not a warning that the U.S. economy was about to plunge into a recession.

The Dow had its fifth straight loss, the longest losing streak since it fell every day for six sessions between Oct. 27 and Nov. 3, 2006.

A huge trade disrupts the market
The day's selling was accelerated by a huge wave of computerized trading that sold stocks and pushed money to the relative safety of bonds. The 10-year Treasury index yield fell from 4.6% to 4.5%.

The Dow shed 200 points in about two minutes. Bargain hunters began pouring money into the market and cutting a 500-point loss to 400 points within minutes.

What caused the huge and fast drop, The Wall Street Journal said, was a computational glitch in the computers that Dow Jones & Co. uses to track the Dow.

In addition, the New York Stock Exchange said that trading was disrupted by "intermittent technical problems" toward the end of the day. Most traders translated that to mean the exchange's computers were overwhelmed by the volume of trading, and there were fears the problems would spill over into tomorrow's trading.

Today's decline began with a decline in China that startled investors, leading to declines of about 3% in indexes in both France and Germany. A suicide bombing attack at the main U.S. military base in Afghanistan just as Vice President d*** Cheney was visiting also rattled markets.

A bid to curb speculation slams Chinese stocks
The battering that U.S. stocks took today started with a crash in China, The Shanghai Composite Index fell nearly 9% today, just a day after hitting a new high and bringing its gains for the year to 14%.

The selling was prompted by fears that authorities would crack down on speculation that has propelled shares. The market soared 130% last year, making it the world's best-performing major market.


"This kind of terrifying fall means the market has become abnormal," analyst Chen Huiqin at Huatai Securities told Reuters, adding that shares could take a while to stabilize even if negative rumors about government policy proved false.

The market was hit by several negative rumors in late trade, including talk that authorities would take strong steps to cool speculative activity, Reuters reported.

The Chinese government announced on Sunday that it had set up a top-level task force to clamp down on illegal securities trading. Authorities had already signaled that another crackdown was coming, and it isn't clear how harsh it will be.

There was talk of an imminent interest rate increase after poor inflation data in the past two months. The central bank raised bank reserve requirements on Sunday.

"Anything that challenges the abundance of global liquidity is a matter of concern," Luca Sega, a money manager for Aperta Sgr in Milan, told Bloomberg News. "The Chinese government seems to be on the case of stopping the investment boom, and we could see some serious repercussions if other countries move in that direction."

A market slump in China shouldn't be a surprise. "Markets get ahead of themselves, and you do have to have a correction at some point," Allen Sinai of Decision Economics told CNBC. "The U.S. data softness is part of the U.S. correction. I wouldn't be surprised to see the U.S. equity market correct some more."

http://articles.moneycentral.msn.com/Inves...s.aspx?GT1=9114


I highly doubt KLSE can sustain. Growing too fast in such a short time.

Quite a big numberof shareprices has gone up a lot, but their net profit remains the same which shows that their share prices are overpriced. If you're playing as a speculator then it's good.

It could also be the govt pumping in money,creating an artificial increase in share prices.

This post has been edited by PowerDunk: Apr 10 2007, 11:27 AM