Beaten-down Wall St slammed by recession fears

NEW YORK, (Reuters) – Rising fears of another  recession hammered U.S. stocks yesterday, sending major  averages sharply lower in a return to the extreme fluctuations  investors endured a week ago.

New worries about the health of European banks set the tone  before the market’s open, and a dismal report on regional U.S.  manufacturing fueled a downward spiral in which the Dow dropped  as much as 528 points, spurring a flight to safe-haven assets  like gold.

The Nasdaq ended more than 5 percent lower, the S&P 500  more than 4 percent and the blue-chip Dow off more than 3  percent.
“Are we going to go into recession? Most market  participants were looking for slow and steady growth, but the  statistics and the financial situation here and in foreign  economies have disturbed that view,” said Richard Weiss, a  Mountain View, California-based senior money manager at  American Century Investments.

The Dow Jones industrial average fell 419.63 points, or  3.68 percent, to 10,990.58, while the Standard & Poor’s 500  Index declined 53.24 points, or 4.46 percent, to 1,140.65, and  the Nasdaq Composite Index dropped 131.05 points, or 5.22  percent, to 2,380.43.

The losses resumed a slide in stocks that began in late  July and seemed to moderate in the last few days. In a more  worrisome sign, volume was heavier than on recent positive  days, with 11.4 billion shares changing hands, highest so far  this week.

Volatility jumped, with the CBOE Volatility Index or VIX, a  barometer of Wall Street anxiety, up 38 percent at 43.56. More  investors were taking out protective positions against declines  in the market.

The S&P 500 is now off 16.4 percent from its April 29  closing high, but the benchmark index still ended above its  slump on Aug. 9 at 1,101.54.
Sectors associated with growth were hit hard. Top drags on  the Dow included shares of IBM, down 4.5 percent at $163.83,  and United Technologies, down 5.5 percent at $68.12. On the  Nasdaq, shares of Oracle fell 8.3 percent to $25.19.

Adding to fears of another recession, a survey of U.S.  Mid-Atlantic factory activity by the Philadelphia Federal  Reserve Bank showed a drop in August to its lowest level since  March 2009.

Hewlett-Packard Co slumped 6.1 percent after reporting  quarterly results.
Bank shares also fueled the market’s declines, with the KBW  Banks Index down 5.6 percent.

Around the Web

Comments