Stocks plunge as attention returns to weak economy

first_imgNEW YORK — Stocks plunged again Wednesday as investors turned their attention back to the weak economy and Europe’s debt problems. Most of the big gains that followed a Federal Reserve pledge to extend super-low interest rates vanished. The Dow Jones industrial average fell more than 500 points. The average had plummeted more than 300 points within minutes of the opening bell and was down as many as 468 points by late morning.On Tuesday, the Dow gained 429 points after the Fed said it planned to keep interest rates extremely low at least through the middle of 2013. It was the first time the Fed announced such a timetable. But the day’s gains were likely just a blip caused by computerized trading based on programs that dictate when to buy or sell, some investors and analysts said.The rally was “so unbelievably fast, it’s as though every computer on Wall Street hit the point where the program said `buy, buy, buy, buy, buy’,” said Daniel Alpert, managing partner of investment bank Westwood Capital. “Machines don’t read Fed announcements, people do — and they were reacting in a negative way.” That was more evident Wednesday, as investors focused on Europe and the Fed’s pessimistic assessment of the U.S. economy.“You’re always going to get people looking for a silver lining in a bear market, and that’s all that Tuesday was,” said Paul Simon, chief investment officer of chief investment officer for Tactical Allocation Group, which has $1.5 billion in assets under advisement. “There are a complex set of issues here and in Europe, and there aren’t a whole lot of positives there.”last_img
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