U.S. stock prices took a wild roller coaster ride Friday after markets worldwide sold off again on worries that the economic woes already evident in Asia and Russia may spread to Latin America, Europe and even the United States.
In what amounted to another global "flight to quality," investors dumped stocks in nearly every world market, switching some of that money into the haven of U.S. Treasury bonds and driving long-term interest rates to record lows.
After falling more than 283 points in the morning, the Dow Jones industrial average ended down almost 78 points as bargain hunters triggered a rally at the end of the day.
The latest global sell-off in stocks was fueled by a torrent of bad news on several continents. For example, investors feared that an imminent currency devaluation in Venezuela could spread to Brazil and Argentina and spark a Latin American economic crisis.
In Germany, investors bailed out of the market--sending the country's main stock index down 5.9%--on fears that German banks may be hurt by the deteriorating economic picture in Russia, where the banks have lent heavily.
Experts fear the crippling currency and debt problems engulfing much of East Asia could infect the economies of many more nations, igniting political instability and possibly even a retreat from capitalism. Foreign woes also could badly damage the relatively strong U.S. and European economies that so far have been able to withstand the Asian financial crisis, analysts warn.
"We really don't have the resources to deal with this raging virus when we find it present in so many countries," said Peter Anderson, chief investment strategist at American Express Financial Advisors in Minneapolis.
"Increasingly, it seems that the U.S. and Western Europe are islands in this sea of turmoil," he said, "and it may only be a matter of time before the U.S. and Europe are in difficult economic straits."
After four weeks of declines in most global markets, the trigger for Friday's accelerated sell-off was a financial meltdown in Venezuela that threatened to spiral into Brazil and Argentina.
Venezuela is consumed by a debt-and-currency crisis that has smashed stock markets throughout the region.
Bond values in Venezuela sank this week as investors worried about the country's ability to repay its obligations. Those fears walloped debt issued by other Latin American nations as well.
