Twin fears of global economic contagion and geopolitical turmoil in the Koreas sent the markets reeling for the second day in a row, sending the Dow below 10,000 and volatility surging.
The Dow Jones Industrial Average last closed below 10,000 on Feb. 10 but the bluechips were well below that level at the open amid widespread damage to US equities.Banks were taking the biggest hit. The SPDR Financial [XLF 14.0405 -0.2895 (-2.02%) ] exchange-traded fund was off 3 percent, mirroring Monday's drop of 2.9 percent in the Standard & Poor's 500 financial sector.
Domestically, the latest housing number was also weak and that added to the pain. Meanwhile, there is good news in all the gloom. Mortgage rates continue to test all time lows and the 30 year fixed rate has planted itself solidly below 5%.
The Dow has now given back about 12% from its highs and that is officially a correction. It was almost certainly finish below 10,000 for the day for the first time in months. Furthermore, each of its 20 components is currently down for the day.
With fears of more European nations about to default, this dynamic doesn't seem like its going away. All safe havens, shorts, as well as gold and other metals have been the top performers during the correction.