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Dow Sinks Following Slide In Global Markets

ALEX CHADWICK, host:

From the studios of NPR West, this is Day to Day. I'm Alex Chadwick.

MADELEINE BRAND, host:

I'm Madeleine Brand. Coming up, the election is less than two weeks away and we'll choose a new president, but who will the president choose to help run the country? We will find out in just a moment.

CHADWICK: First, a grim day for world stock markets. Japan's Nikkei Index was down 9.6 percent. That is the worst drop since 1982, and that was a long time ago. The Pan-European Dow Jones Stoxx Index was off 8.4 percent, the first time since 2003. And for what is happening here in the U.S., NPR's Chris Arnold joins us now. Chris, I think everybody was maybe a little afraid today that the U.S. stock market was just going to slide right off the shelf. What happened?

CHRIS ARNOLD: Hi, Alex. Yeah, before the market even opened, the Dow futures were off 550 points. And when that happens, the system kind of locks up, so there was a lot of speculation that this could be a really horrible day for the U.S. stock market. But you know, down 200, 300, 400 points is sort of a normal day these days, for better, for worse.

CHADWICK: That's a good day.

ARNOLD: So, you know, you can't really read too much into it. But one thing you can say is, people are being a little optimistic in saying, you know, this could be sort of testing the bottom here. You know, OK, we have all this horrible news in world markets and still the Dow didn't go below 8,000, you know? So, that's - that's maybe a good sign.

CHADWICK: Everyone who really wanted to sell has sold, and now you're just kind of muddling around.

ARNOLD: There have been some encouraging signs this week, and there's been a lot of concern about the frozen credit markets. And for people who don't understand that, but most people would understand exactly what that means, this is basically the plumbing for the economy. If you think of money as sort of the tap water of the economy, there's a lot of banks and corporations right now who are turning on their faucets and there's nothing coming out. There's just a trickle of money coming out, and that's happening because banks are sitting on cash. They are afraid to lend it out, and because of that, hotels aren't getting built, companies can't buy equipments. It could push unemployment a lot higher. It looks like that old problem, though, with these frozen credit markets is getting a lot better.

CHADWICK: So, what about the big money-market funds that was news earlier this week? The government said, we're going to put money into those and guarantee those funds, or at least partly guarantee them. What's going on there?

ARNOLD: Yeah, the money-market funds are a huge part of this whole thing. They're basically a giant reservoir of that money, trillions of dollars. And normally that money flows out through short-term loans to banks and corporations. The government has taken steps to encourage that to happen, again, because money-market funds haven't been loaning that money out. Just this week, the ice really started to break up there. I talked to one big fund manager at Vanguard, this giant mutual-fund company. He just sold 10 billion dollars in treasuries and put it back into the system, basically. You can see the LIBOR rates coming down. This is a rate that attracts some of those. You know, the pipes are thawing, and that's very good.

CHADWICK: And one more item, back where all this started, Chris, housing.

ARNOLD: Yes, it's where it started. It remains a giant mess. We've got millions of people - could still lose their homes to foreclosures. The government is recognizing it needs to do something about that. There was one glimmer of hope here. The sales of existing homes were up five percent. That's somewhat encouraging, but there is still a lot of problems.

CHADWICK: NPR's Chris Arnold, watching the market for us. Thank you, Chris.

ARNOLD: Thanks, Alex. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Alex Chadwick
For more than 30 years, Alex Chadwick has been bringing the world to NPR listeners as an NPR News producer, program host and currently senior correspondent. He's reported from every continent except Antarctica.
NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.