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Stocks had their worst day of trading since the Sept. 11, 2001, terrorist attacks Tuesday, briefly hurtling the Dow Jones industrials down more than 500 points on a worldwide tide of concern that the U.S. and Chinese economies are stumbling and that share prices have become overinflated.
The steepness of the market’s drop, as well as its global breadth, signaled a possible correction after a long period of stable and steadily rising stock markets.
A 9 percent slide in Chinese stocks set the tone for U.S. trading. The Dow began the day falling sharply, and the decline accelerated throughout the course of the session before stocks took a huge plunge in late afternoon as computer-driven sell programs kicked in.
Bond prices shot higher as investors bought into the safe-haven Treasury market, pushing the yield on the benchmark 10-year Treasury note down to 4.47 percent, its lowest level so far this year, from 4.63 percent late Monday. The bond buying was sparked primarily by the durable goods orders, which the Commerce Department said fell 7.8 percent, much more than what the market expected.
The durable goods drop raised the chance of the Federal Reserve easing interest rates later in the year — a possibility that makes the bond market an attractive place to be right now.
The hope for slowing inflation could be dashed, though, if energy costs keep rising.