The Dow Jones industrials rebounded after starting the day down almost 300 points. They closed down 137 points, or 1.1 percent. The futures markets, which can indicate whether stocks will rise and fall, looked so pessimistic before the opening bell on Wall Street that the stock exchange invoked a special rule designed to ease volatility.
Stocks plunged 5 percent in Germany and 4 percent in France. And in Japan, the benchmark Nikkei average lost more than 10 percent of its value in a matter of hours.
The quake damaged roads, ports, airports and factories in Japan, disrupting the shipment of goods in and out. The disaster blindsided multinational companies that were bracing for trouble in their transportation lines on the other side of the world — at the Suez Canal or elsewhere in the Middle East where protests are destabilizing countries from Bahrain to Libya, says Patrick Burnson, executive editor of Supply Chain Management.
It's shut down auto and auto parts factories. Analysts at Tong Yang Securities in South Korea "do not expect production to normalize anytime soon" in Japan. Even plants that stay open may have to wait for parts to arrive, a problem made worse because so many factories follow just-in-time supply management and keep few parts on hand.
Car plants in Thailand could have a harder time getting steel, much of which is imported from Japan.
Japan is a major supplier of NAND flash memory chips, commonly used in portable electronics. Japan-based Toshiba Corp., a big maker of the chips, was among the technology companies that temporarily closed facilities.
Prices for the chips jumped 10 percent from before the earthquake to Monday and another 3 percent Tuesday, according to Jim Handy, a director at Objective Analysis and an expert on the electronics and semiconductor industries.
The "wafers" that are key building blocks of computer chips are also commonly made in Japan. A shortage could pinch big buyers such as Intel Corp., the world's biggest semiconductor company, and Texas Instruments Inc. — though one firm, Barclays Capital, believes Texas Instruments has enough in stock to get by. Supplies are lean of capacitors and other electronics used in cellphones, which are also often made in Japan. Nokia Corp. relies heavily on Japan for those electronics.
Chinese companies are bracing themselves for losses and delays from disruptions in shipments of high-end electronics and auto components from Japan and some are looking for import replacements from South Korea or Taiwan, according to the International Business Daily, the official paper of China's Commerce Ministry.
Some analysts note that companies and consumers that now buy Japanese products can often find alternatives made elsewhere.
"What is made in Japan now has lots of competitive alternatives that didn't exist 25 years ago," says Peter Morici, a professor at the University of Maryland and a former director at the U.S. International Trade Commission. "If there aren't as many Camrys in the country this year as there might have been, you might have a couple hundred thousand additional Ford customers. If those people have good experiences with those cars, it could change buying patterns for life."
David Rea, an economist with Capital Economics in London, said, "You'll have Japan's competitors — largely South Korea and Taiwan, who are in high end manufacturing, and China as well — come in and undercut Japanese businesses experiencing disruption from the earthquake."
If Japan's infrastructure doesn't get rebuilt quickly enough, Japanese companies may transfer production overseas to pick up the slack, Rea added.
The reconstruction of Japan's northeastern coast might also provide business opportunities for foreign countries. Malaysian timber, for instance, will likely be needed to rebuild homes and other buildings. IHS predicts that the quake will "ultimately boost" U.S. exports to Japan.