Stocks plunged worldwide, with the Dow industrials sinking nearly 300 points shortly after the open Tuesday. Jittery investors flocked to the perceived safety of Treasuries and the U.S. dollar, while commodities fell sharply from their recent highs.
In mid-day trading, the Dow Jones industrial average (INDU) was down 212 points or 1.8%, after falling as much as 297 points earlier. All 30 of the Dow’s components were in the red. The S&P 500 (SPX) fell 22 points, or 1.7%; and the Nasdaq (COMP) dropped 46 points, or 1.7%.
The sharp sell-off follows a 10.6% drop in Japan’s Nikkei index (NKY) earlier in the day. Other Asian markets finished lower Tuesday, with the Shanghai composite losing 1.4%, and Hong Kong’s Hang Seng index falling 2.9%.
European markets also closed sharply lower. Germany’s DAX dropped 3.4%, while France’s CAC-40 lost 2.3% and Britain’s FT-100 retreated 1.3%.
Markets are still reeling from the staggering human and economic toll from Japan’s 9.0-measure earthquake and subsequent tsunami on Friday, which killed at least 2,475 people. Another 3,000 remain missing.
The earthquake also damaged Japan’s Fukushima Daiichi nuclear power plant, and subsequent explosions and fires there have only escalated fears about a nuclear crisis in Japan. Over the past two trading days, the Nikkei shed 16.1% — its worst two-day loss since 1987.
“The U.S. market is pricing in a worst-case scenario with the nuclear situation,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
“The concerns about radiation — and what that could mean for loss of life — could make this a more globalized crisis rather than a centralized disaster,” he added.
Ahead of the opening bell, steep losses in world markets triggered the New York Stock Exchange to invoke Rule 48 — which gives the exchange the right to pause trading in the event of exteme volatility.
NYSE typically invokes the rule several times each year.
The dollar rose versus the euro and the British pound, but fell slightly against the yen. Like the U.S. dollar, the yen is also considered a safe-haven asset in times of economic uncertainty.
The price on the benchmark 10-year U.S. Treasury rose as investors sought the safety of government debt, pushing the yield down to 3.29% from 3.35% late Monday.
Amid the volatility Tuesday, investors will also watch for the U.S. Federal Reserve‘s policy statement in the afternoon.
The central bank’s Federal Open Market Committee is not expected to discuss any changes to interest rates or its asset purchase program.