DOW - Stocks Plunge to 2011 Lows on Japan Crisis

Dow

11,613.30

-242.12

-2.04%

By: Abby Schultz

Stocks fell to the lows of the year on Wednesday in a volatile session driven by fears stemming from Japan's nuclear crisis.

The Dow Jones Industrial Average fell 242.12 points, or 2.04 percent, to close at 11,613.30, the blue-chip index's lowest close for the year. At its worst point on Wednesday, the Dow slid nearly 300 points.


The S&P 500 fell 24.99 points, or 1.95 percent, to close at 1,256.88, its lowest close for the year.


The Nasdaq also fell to its 2011 lows, sinking 50.51 points, or 1.9 percent, to close at 2,616.82.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, skyrocketed more than 20 percent to above 29, after shooting more than 25 percent higher earlier.

Stocks initially rallied off the lows of the session after news reports that Tokyo Electric Power almost completed a power line that could restore electricity to the stricken nuclear power plant and potentially solve the immediate crisis.


The power line to Fukushima Dai-ichi is almost complete, an official at the Tokyo Electric Power Co. said, according to the Associated Press. Officials plan to try it "as soon as possible" but he could not say when, the AP reported.

The power line would allow officials to use electric-powered pumps to maintain a steady water supply to the plant, including the troubled storage ponds.

Earlier, the market fell to the lowest levels of the year after U.S. Energy Secretary Steven Chu said he believes a "partial meltdown" did occur in Japan, but that it "doesn't mean the containment" system will fail.

In Chu's comments, before the House Energy & Commerce subcommittee, he said the situation was more serious than Pennsylvania's Three Mile Island nuclear accident, the worst in U.S. history.

The market initially fell sharply after news circulated that European Union's energy leader last night warned of a further catastrophe at Japan's nuclear site in the coming hours. But while the market regained some ground after a spokeswoman for the energy minister said he had no specific information, it quickly lost it as trading continued.

The sharp downdraft reflects the fact there is "no depth to the market," said Brian Battle, vice president of trading at the Chicago-based Performance Trust Capital Partners.

"Nobody is betting either way, going long or short," Battle said. "We’re going to have to get used to that until we know what’s going on in Japan is clear."

Another trader also cited the lack of liquidity in the market, and said the freefall in the market came after the S&P 500 fell below 1,260.

For now, the news out of Japan remained fluid and uncertain, as officials continued to battle the disaster. Foreign bankers, meanwhile, fled Tokyo to avoid the escalating crisis.

Investors were also focused on events in the Middle East after Bahraini police cleared rotesters from a central roundabout that had become the symbol of an uprising by the island's Shi'ite Muslim majority.