U.S. markets lose $600B in global plunge

The Dow Jones Industrial Average today fell as much as 546 points – the most since New York’s first trading day after the terrorist attacks of Sept. 11, 2001 – before closing at 12,216.24, a drop of 416.02 points or 3.3 percent. The drop was driven by a Chinese market crackdown that sparked a global selloff, Bloomberg News reports.

The Dow and the Standard & Poor’s 500 Index ended the day with their biggest declines since March 2003 – all but two companies in the S&P 500 lost ground, as the index fell 50.33 points or 3.5 percent to 1,399.04 – and the Nasdaq saw its worst day since December 2002, closing down 96.66 points or 3.9 percent at 2,407.86. The U.S. plunge alone erased $600 billion in market value and all of 2007’s gains. Europe’s Dow Jones Stoxx 600 Index dropped 3 percent, Russian shares slid from their all-time high and Brazil’s Bovespa lost 6.6 percent.

The worldwide rout tumble was sparked by China’s approval of a special task force to address illegal stock-market investments. Chinese stocks fell the most in a decade, after doubling in the past year. The Shanghai and Shenzhen 300 Index dropped 9.2 percent, wiping out $107.8 billion in market value.

The plunge follows recent U.S. run-up fueled partly by two record leveraged buyouts: TXU Corp.’s agreement yesterday to be acquired by private equity firms for $45 billion and Equity Office Properties Trust’s Feb. 7 sale to Blackstone Group LP for $39 billion. “Things just got a little overheated in the U.S. investment scene and it needs to calm down a little bit,” John Kattar, who oversees $1.8 billion as chief investment officer at Eastern Investment Advisors in Boston, told Bloomberg. “A lot of the frothiness of the private-equity deals should subside now.”

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