WORLD> America
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WORLD> America
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US stocks plunge anew as data points to recession
(Agencies)
Updated: 2008-10-16 09:30
Investors agonizing over a faltering US economy sent the stock market plunging all over again Wednesday after a stream of disheartening data convinced Wall Street that a recession, if not already here, is inevitable. The market's despair propelled the Dow Jones industrials down 733 points to their second-largest point loss ever, and the major indexes all lost at least 7 percent. The slide meant that the Dow, which fell 76 points on Tuesday, has given back all but 127 points of its record 936-point gain of Monday, which came on optimism about the banking system in response to the government's plans to invest up to US$250 billion in financial institutions. Wednesday's sell-off began after the US government's report that retail sales plunged in September by 1.2 percent -- almost double the 0.7 percent analysts expected -- made it clear that consumers are reluctant to spend amid a shaky economy and a punishing stock market. The Commerce Department report was sobering because consumer spending accounts for more than two-thirds of US economic activity. The reading came as Wall Street was refocusing its attention on the faltering economy following stepped up government efforts to revive the stagnant lending markets. Then, during the afternoon, the release of the Beige Book, the assessment of business conditions from the Federal Reserve, added to investors' angst. The report found that the country's economy continued to slow in the early fall as financial and credit market problems took a turn for the worse. The central bank's report supported the market's belief that difficulties in obtaining loans have choked growth in wide swaths of the economy. "Even though the banking sector may be returning to normal, the economy still isn't. The economy continues to face a host of other problems," said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com. "We're in for a tough ride."
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