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U.S. Markets Tumble To Lowest Levels Since September

ARI SHAPIRO, HOST:

Markets tumbled today, hard. It's a continuation of a recent rough patch on Wall Street. Already this year, both the Dow and the S&P are down more than 7 percent. NPR's Jim Zarroli joins us now to discuss the sour mood among investors. Hey, Jim

JIM ZARROLI, BYLINE: Hi.

SHAPIRO: How bad was it today?

ZARROLI: Oh, your basic lousy damn on Wall Street - a lot of stocks down, consumer stocks down. You even saw, you know, some of the big, hot stocks of last year falling even further - Amazon down 5.8 percent, Facebook down 4 percent, big drops in small-cap stocks. The Russell 2000, which is an index of small-cap stocks, is now down 22 percent, which is what we officially call a bear market. So it's just one of those days when, you know, nothing was good, and it's just a continuation of what we've seen in the past few days. The first week of the year was bad and now that's continuing. A lot of investors just, you know, don't see anything to be happy about.

SHAPIRO: It seems so weird because we have a lot of evidence that the economy on the whole is doing pretty well. There was just a good jobs report. I mean, why is Wall Street not feeling the joy?

ZARROLI: Well, the jobs report is backward-looking, of course, and investors are worried about the future. You know, I think they see we've had some weak corporate profits in a lot of different sectors, banking, especially energy. And also, you know, economies all over the world are weakening - too much capacity, not enough demand. You have hot growth countries like China slowing down and then other countries like Brazil entering a deep recession. So there's less spending, less demand for U.S. products, and that's, you know, hurting everybody. And investors look at this and say, yeah, you know, the U.S. economy may be doing OK now, but how long is that going to last?

SHAPIRO: You mentioned energy, and I want to ask about oil prices, which have been falling, which seems great for consumers who are buying gas at under $2 a gallon. But why is that worrisome for investors?

ZARROLI: Yeah, and that was really what seemed to touch off the real decline in stocks today. I mean, oil keeps falling. We actually had something of a rally early in the day, and then we had a report saying oil inventories were a lot higher than expected, which is something that always affects prices. And after that, we saw West Texas Intermediate falling below $30 a barrel, which is another bad milestone. And, you know, of course, this is very good for consumers, but it is a disaster for countries that depend on oil revenues. And it's also a disaster for energy companies. I mean, we're starting to see a rise in bankruptcies in the oil and gas sector, and it's hurting states that has to do - that depend on energy.

SHAPIRO: Should Americans worry that this might be a sign that the U.S. economy is slowing?

ZARROLI: Well, it was funny, I was watching today and a lot of stock market pundits are now sort of officially talking about recession, using that word. But you don't hear that from economists, really. And it sort of is a reminder of the fact that the stock market is not the same as the economy. I mean, you can have the stock market going down when the economy is not. There's an old saying, the stock market has predicted nine of the past five recessions.

SHAPIRO: (Laughter).

ZARROLI: You know, so it can go down when the economy is still doing OK, and - but it is something to watch, definitely, on where the market is going. And I think right now a lot of investors are worried about what's ahead.

SHAPIRO: That's NPR's Jim Zarroli in New York where Wall Street had more steep losses today. Thanks, Jim.

ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.

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