US stocks fall amid the continuing Japanese crisis, but the indexes come far off the morning’s steep plunge after the stream of dire headlines eases off, and the FOMC holds its hand steady on the tiller. That seemed to calm some folks.
The unfolding horrors in Japan send investors across the globe scrambling, although as always there are others investors looking to profit from the race for the exits. Without a stream of dire headlines in the afternoon, those investors came back to the market.
DJIA loses 138 (1.2%) to 11855, after falling nearly 300 points in the first five minutes of trading; Dow’s now down about 4% from February highs. S&P 500 drops 15 (1.1%) to 1282, Nasdaq Comp loses 34 (1.3%) to 2667. Commodities sell-off sharply across the board, while Treasurys rise.
The last time the Dow dropped that sharply at the open was Oct. 24, 2008, when it lost 504 points in the first five minutes. The index finished that day down 3.6%, losing 312 points.
Look, the Japanese are still just trying to figure out just how bad things really are, forget about planning for a rebuilding effort, and the fallacy of expecting that to be a good thing was exposed by George Melloan on the op-ed page of today’s Journal:
As the great 19th-century economist Frederic Bastiat taught in the “fallacy of the broken window,” the GDP growth that comes from reconstruction brings no net gain in society’s wealth. It just replaces, over time, what was lost. “Destruction is not profitable,” he wrote.
It’s going to take a long time, a very long time, for the Japanese just to get back to where they were last Thursday.