The Dow Jones industrial average fell 360 points and the broader stock market dropped nearly 3 percent, driven down by fear that the troubles in housing are likely to continue well into next year, damaging credit and spreading pain to the rest of the economy. After a relatively strong summer, consumer spending is expected to tighten and business profits slow in the months ahead, analysts said.
The DOW was up 200 points they day prior, so the drop wasn't all that significant. What's more important is that US productivity and employment made gains October. Right now the folks on Wall Street are leveraging the losses reported by the investment houses and the price of oil to induce selling. The market was up a shade under 5% for the year as of Oct 31. The bananas over there don't like minimal 5% gains. The only way they make money is when the market moves up or down. Since we were near the top end record, the market must go down before it will rise once again.
Originally Posted by Big
Some folks are yanking their investments and putting it into fixed rates of 4-5% removing the risk of a the market down turn. Why not? If you are looking at, 5% market growth, why take the risk when you can almost match it in a fixed, no risk investment.
Fall and winter are the slack periods for real estate sales so you won't see any positive information for a while in areas that have not been overbuilt like AZ, NV, and some others. Come spring, people will want to uproot again, go bigger or downsize, real estate will reawken.
This situation has existed before, early 80's, early 90's. It rebounded then, it'll rebound again since speculative buying has been removed from the marketplace. There a lot of people that over paid for new, or borrowed too much against equity, same as the 90's, but they'll survive though they may have to remain planted for a bit to avoid selling at a loss. Even then, any other home purchased, will be selling at a lower price. Fundamentally, it's a paper loss unless of course you are losing the home altogether on a foreclosure.