Stocks fall on economy fears
Source: Bloomberg News |
August 5, 2011, Friday
|
Print Edition
Print Edition
United States stocks plunged yesterday, driving the Standard & Poor's 500 Index to the biggest nine-day retreat since the bull market began in March 2009, as concern the economy is weakening intensified.
Chevron Corp and Freeport-McMoRan Copper & Gold Inc dropped at least 4.5 percent as oil and copper slumped after Japan intervened in foreign-exchange markets to weaken its currency. Gap Inc, the largest US apparel chain, sank 8.4 percent after sales missed analysts' estimates. DirecTV, the largest US satellite-television provider, tumbled 6.9 percent after adding fewer US customers than analysts estimated.
The S&P 500 dropped 2.8 percent to 1,224.56 at 12:08pm in New York. The benchmark gauge for American equities dropped for the eighth time in nine days, to the lowest level on a closing basis since December 6. The more than 10 percent drop since April 29 means the index has entered what is known as a correction. The Dow Jones Industrial Average retreated 315.6 points, or 2.7 percent, to 11,580.84, erasing its gain for 2011.
"It's unbelievable," said David Joy, Boston-based chief market strategist at Ameriprise Financial Inc. "It's nervousness. The emotional aspect of this is ticking higher. It's left everybody with this mindset that things are not good. The situation in Europe is getting everyone concerned. We had the impact of the Japan intervention in the currency market. The flight-to-quality trade is going to pick up."
Global stocks had their biggest one-day rout since March 2009. A measure of global equities fell 10 percent from this year's high in May, entering its first correction in more than a year, amid concern about a recession. The MSCI All-Country World Index of stocks in developed and emerging markets slid 3.4 percent to 313.8, falling 12 percent from its May 2 high.
Stocks tumbled from Hong Kong to London and Sao Paulo as the yen dropped by the most since October 2008 against the dollar after Japan sold its currency to stem gains that threaten the nation's economic recovery.
The euro fell against the dollar after European Central Bank President Jean-Claude Trichet said policy makers will offer banks additional cash to ease tensions in financial markets.
Trichet also indicated the ECB is reluctant to shelve further rate increases even as investors reduce bets on the ECB adding to its two rate moves in 2011. While acknowledging a "particularly high" level of uncertainty, rates are still "accommodative" and inflation risks "remain on the upside," he said.
"The mood right now is gloomy," said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas.
Stock-futures maintained losses before the open of regular trading as a report showed that initial claims for unemployment insurance payments in the US fell last week to a level that shows limited improvement in the labor market.
Chevron Corp and Freeport-McMoRan Copper & Gold Inc dropped at least 4.5 percent as oil and copper slumped after Japan intervened in foreign-exchange markets to weaken its currency. Gap Inc, the largest US apparel chain, sank 8.4 percent after sales missed analysts' estimates. DirecTV, the largest US satellite-television provider, tumbled 6.9 percent after adding fewer US customers than analysts estimated.
The S&P 500 dropped 2.8 percent to 1,224.56 at 12:08pm in New York. The benchmark gauge for American equities dropped for the eighth time in nine days, to the lowest level on a closing basis since December 6. The more than 10 percent drop since April 29 means the index has entered what is known as a correction. The Dow Jones Industrial Average retreated 315.6 points, or 2.7 percent, to 11,580.84, erasing its gain for 2011.
"It's unbelievable," said David Joy, Boston-based chief market strategist at Ameriprise Financial Inc. "It's nervousness. The emotional aspect of this is ticking higher. It's left everybody with this mindset that things are not good. The situation in Europe is getting everyone concerned. We had the impact of the Japan intervention in the currency market. The flight-to-quality trade is going to pick up."
Global stocks had their biggest one-day rout since March 2009. A measure of global equities fell 10 percent from this year's high in May, entering its first correction in more than a year, amid concern about a recession. The MSCI All-Country World Index of stocks in developed and emerging markets slid 3.4 percent to 313.8, falling 12 percent from its May 2 high.
Stocks tumbled from Hong Kong to London and Sao Paulo as the yen dropped by the most since October 2008 against the dollar after Japan sold its currency to stem gains that threaten the nation's economic recovery.
The euro fell against the dollar after European Central Bank President Jean-Claude Trichet said policy makers will offer banks additional cash to ease tensions in financial markets.
Trichet also indicated the ECB is reluctant to shelve further rate increases even as investors reduce bets on the ECB adding to its two rate moves in 2011. While acknowledging a "particularly high" level of uncertainty, rates are still "accommodative" and inflation risks "remain on the upside," he said.
"The mood right now is gloomy," said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas.
Stock-futures maintained losses before the open of regular trading as a report showed that initial claims for unemployment insurance payments in the US fell last week to a level that shows limited improvement in the labor market.
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