The Dow Takes A 325 Point Plunge!!

The Dow dived 3%(325 points) in trading after euro zone debt fears struck Wall Street and traders raced to the safety of gold and government bonds. Hit the jump to read the rest of the story.
Funk Flex

As of 12:06 p.m. ET, the Dow Jones Industrial Average tumbled 325 points, or 2.9%, to 10,910, the S&P 500 slid 31.4 points, or 2.7%, to 1,141 and the Nasdaq Composite dipped 56.1 points, or 2.3%, to 2,425.
The euro zone debt crisis, which had fallen into the background, once again took the spotlight on Tuesday morning. Trading was ferocious once again, with the VIX, Wall Street’s volatility gauge, surging 22.3%.
Gold prices are extending their meteoric run as traders once again sought out shelter. The precious metal recently jumped $46.50, or 2.7%, to $1,790 a troy ounce. Meanwhile, long-term Treasury prices once again rallied, pushing the yield on the 10-year note to 2.14%.
The U.S. financial sector, which sustained steep losses on Monday, only to rebound on Tuesday, were once again deep in negative territory. Bank of America (BAC: 7.14, -0.46, -6.12%) plummeted more than 9% and was the second-worst performing component of the Dow. Volume on the New York Stock Exchange was poised to fall on-par with the prior day, which weighed in as the twelfth-largest in history.
French President Nicholas Sarkozy plans on holding an extraordinary meeting with the country’s finance ministers and central bank, according to a report by The Wall Street Journal. Reports that the meetings may have been to discuss a looming downgrade of France,which rattled stock futures, were softened after Moody’s Investor Service, Fitch and Standard & Poor’s all affirmed France’s AAA rating, with a stable outlook.
There were also concerns over how much exposure European banks have to the sovereign debt of countries like Greece, which narrowly averted a default just a month ago.
“Speculation surrounding French bank Societe Generale … has smashed banking stocks across Europe,” Will Hedden, a London-based trader at IG Index, wrote in a note to clients.
Indeed, Societe Generale nose dived 20% as rumors swirled about its capital position. The bank denied all market rumors, but failed to stem the deep losses. Additionally, the cost to insure the debt of the banks soared in late-day trading in Europe.
The euro extended losses from earlier in the session, recently skidding 1.5%.
Also on the European front, The European Central Bank unveiled plans to buy-up Spanish and Italian bonds earlier in the week, as fears in the credit markets have spread from relatively small economies like Greece to larger ones.
The last two trading sessions have been nearly polar opposites. On Monday, blue chips plunged more than 600 points, then the Dow staged a 430 point comeback rally the next day. Trading has been tumultuous; indeed, the Dow was essentially unchanged going into the last hour of trading in the prior session and then the benchmark index spiked 503 points, or 4.7%, before the closing bell.
The Federal Reserve said on Tuesday it plans on keeping interest rates at historically-low levels for the next two years in a bid to keep the economy afloat. The central bank also said it sees the economy, and labor market, rebounding less quickly than it initially forecast.
Concerns over the state of the economic recovery have weighed heavily on the markets over the past several weeks as fears have heightened that the U.S. economy could double dip into recession territory. The flow of economic data releases has been slow this week, with only one report released on Wednesday.
Wholesale inventories ticked 0.6% higher in June, less than the 1% increase economists forecast. Wholesale sales, however, increased 0.6% — a quicker rate than the 0.3% increase that was expected.
Many investors, however, have noted that there may be buying opportunities created amid the tumult on Wall Street.
“Stocks are oversold,” Bob Doll, chief equity strategist at BlackRock, said in a release. Doll also added that the company that manages more than $3 trillion in assets still sees a recession as unlikely, although, the risk of falling back into recession is “higher than normal.”
Energy markets, like equities, have been very volatile. The weekly energy inventory report was more bullish than expected, helping lift commodities. Crude stocks fell 5.2 million barrels, compared with a forecast of 1.5 million barrel build. Gasoline inventories fell 1.6 million barrels, short of the 500,000 barrel build that was expected.
Light, sweet crude climbed $1.39, or 1.7%, to $80.68 a barrel after settling at a new 2011 low in the prior day. Wholesale RBOB gasoline jumped 4 cents, or 1.7%, to $2.71 a gallon

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