 |
|
| Politics Forum Index » USA (Congress) Politics Forum » Stocks plunge as worries mount about recovery... |
|
Page 1 of 1 |
|
| Author |
Message |
| Kenyan Obama... |
 Posted: Fri Oct 30, 2009 12:14 pm |
|
|
|
Guest
|
http://www.usatoday.com/money/markets/2009-10-30-stocks-fri_N.htm
By Sara Lepro, Associated Press
NEW YORK — Grim signals about consumer spending ripped through the markets
Friday, sending stocks tumbling as investors raced for safe havens.
The Standard & Poor's 500 index and the Nasdaq composite index ended with
losses for October, breaking a streak of seven straight months of gains.
The Dow Jones industrial average tumbled 250 points, erasing a 200-point
gain Thursday and ending the month flat.
Drops in key barometers of the health of consumers — what they're
spending, what they're earning and how they're feeling — fanned worries
that an economic recovery celebrated by the market only a day earlier
won't last.
WARY CONSUMERS: Spending falls as incomes unchanged
BUT ...Business spending is up
The heaviest selling Friday came in areas that have been stalwarts of the
market's powerful rally since March: financials, technology, energy and
industrials. The safest areas, like health care, consumer staples and
utilities, fared better.
Investors fled to safer assets like the dollar and Treasurys.
Bank stocks were hardest hit as investors worried about the fate of
commercial lender CIT Group. Billionaire investor and bondholder Carl
Icahn agreed to support the company's restructuring plan and provide it
with a $1 billion line of credit, but investors are still worried that the
company could file for bankruptcy protection. The stock tumbled 24%.
Six stocks fell for every one that rose on the New York Stock Exchange, a
virtual reversal of the tide that swept stocks higher Thursday when the
government said the economy grew faster than expected in the summer.
Indicators of investor skittishness surged. The Chicago Board Options
Exchange's Volatility Index, known as the market's fear gauge, soared
nearly 25% to its highest level since July.
Stocks began skidding after the Labor Department said personal spending
fell 0.5% in September. The drop was in line with forecasts, but it was
also the largest slide in nine months and followed a 1.3% jump in August
fueled by the government's popular Cash for Clunkers car rebate program.
The government also said that personal income, the fuel for future
spending, was flat in September compared with the previous month.
A drop in the mood of consumers added to the day's bad news. The
Reuters/University of Michigan consumer sentiment index fell to 70.6 in
October from 73.5 in September. The reading was revised higher from an
early estimate and was roughly in line with expectations.
"Until we get to better employment numbers, it's hard to get real income
growth and real spending ... and we're just not there yet," said Kurt
Karl, chief US economist at Swiss Re.
Friday was the end of the fiscal year for many mutual funds. Fund managers
often sell some investments to minimize taxes for shareholders.
The Dow fell 249.85, or 2.5%, to 9,712.73. It ended October with a meager
gain of 0.005%.
The broader Standard & Poor's 500 index fell 29.92, or 2.8%, to 1,036.19,
and the Nasdaq composite index dropped 52.44, or 2.5%, to 2,045.11.
On the New York Mercantile Exchange, gold prices slipped about $9 to
$1,037 an ounce, while oil prices tumbled $2.38 to $77.49 a barrel.
Bond prices surged, pushing their yields lower. The yield on the benchmark
10-year Treasury note fell to 3.39% from 3.50% late Thursday.
Stocks have fallen for most of the past week as worries about the economy
escalated. Without stronger evidence that the labor market is improving
and consumers are feeling more comfortable about spending, investors will
likely have trouble extending the market's gains.
RECOVERY WATCH: Tracking the economy; slower growth in early 2010 expected
JOBS OUTLOOK: Latest data for all states, 384 metros
"I think you have a market that is ultimately looking for its direction,"
said Bob Froehlich, senior managing director at Hartford Financial
Services. "We really are at the inflection point. You tend to have an
overreaction to both extremes."
Trading is likely to remain volatile in the coming week amid a flood of
major economic news, including the Institute of Supply Management's
readings on the manufacturing and services industries, sales reports from
major retailers and the Labor Department's October employment report —
arguably the month's most important piece of economic data. The Federal
Reserve will also convene for a two-day policy meeting beginning Tuesday.
Volume at the New York Stock Exchange came to 1.7 billion shares compared
with 1.6 billion Thursday.
In other trading, the Russell 2000 index of smaller companies fell 17.45,
or 3%, to 562.77.
Overseas, Britain's FTSE 100 fell 1.8%, Germany's DAX index dropped 3.1%,
and France's CAC-40 lost 2.9%. Japan's Nikkei stock average rose 1.5%. |
|
|
| Back to top |
|
|
|
|
|
All times are GMT - 5 Hours
The time now is Thu Dec 10, 2009 5:19 pm
|
|