Fearing that a Mideast war would cause economic chaos for much of the industrialized world, investors continued to bail out of stock markets from New York to Singapore on Thursday, sending prices on nearly every major exchange to their lowest levels in at least a year.
The Dow Jones industrial average plunged 76.73 points, or 3%, to close at 2,483.42--the lowest close since July, 1989. But the selloff was nothing compared to the rout in Tokyo's market, where the value of the Nikkei stock index fell 5.8%--the fourth-biggest one-day drop in history.
Fears of war in the Mideast also sent oil prices rocketing. The price of the benchmark U.S. crude rose 71 cents Thursday in New York to $31.93 a barrel, the highest level in seven years.
"At some point, everyone (in the stock market) rushes for the exit, and some people get trampled," said Michael Metz, market strategist at Oppenheimer & Co. in New York.
By the end of the day, U.S. stocks were worth $95 billion less than they had been the day before. Share values have slid by more than $500 billion since July, when prices peaked, according to Wilshire Associates, a Los Angeles firm that tracks the value of shares traded on the nation's largest exchanges.
The rise in oil prices was a major factor in the stock selloff. Investors believe that petroleum production in Saudi Arabia and other Mideast nations could be abruptly curtailed if war breaks out between the United States and Iraq. That would send oil prices and inflation soaring, which could cause economic problems in any nation that depends on petroleum imports.
Although war always makes investors nervous, a war in the Middle East is particularly worrisome because it would probably affect worldwide oil supplies and prices. Rising oil prices fuel inflation.