The Los Angeles Times reports fears of a global recession sparked today's decline.
The worldwide sell-off began the moment investors were able to weigh in on the historic decision by Standard & Poor's to revoke its AAA rating of U.S. debt and the rout continued in a day that echoed the market chaos of the financial crisis three years ago.
"The sentiment among Main Street investors is this is going to be 2008 all over again," said David Dietze, chief investment strategist at Point View Financial Services in Summit, N.J. "They're thinking 'I may have been fooled once but I won't be fooled a second time and I want out' " of the stock market.
By Monday's closing bell, the Dow had sustained its largest one-day drop — 634.76 points, or 5.6% — since the fall of 2008. In one day, $700 billion in U.S. stock value was wiped out, according to financial data company Wilshire Associates.
The Christian Science Monitor asks a provocative question now that the stock market has lost more than nine percent of its value over the past three business days -- does that steep decline in that short period of time equate to a "crash?"
To some market observers, the latest decline is merely a “correction,” compared with what happened in 1929 and 1987. Despite the large drop – some 513 points last Thursday, as well – the Dow is down 9.13 percent over three days of trading.
“A stock market crash is in the range of 25 percent or more in one day,” says Fred Dickson, chief investment strategist at D.A. Davidson & Co. in Lake Oswego, Ore. “We’re down about 10 percent in 10 days.”Barron's adds that panic is certainly behind what has happened since last Thursday.