NST Online Business Times : latest
NST Online Business Times : latest |
| US bourses see US$1tril wiped off Posted: 23 Sep 2011 06:48 PM PDT NEW YORK: An estimated US$1 trillion was wiped off the value of US stocks this week, amid heightened fears that the world economy is heading for another recession. After a string of warnings that Europe and the United States must do more to put their economies in order, the Federal Reserve on Wednesday provided the straw that broke the market's back. The bank's warning, that there are "significant downside risks to the economic outlook," sent stocks into a tailspin with the Dow Jones industrial average losing nearly 800 points over the next 24 hours. By the end of Thursday an estimated US$103 billion had been wiped off the value of that 30-member index.
According to figures from the Wilshire 5000, the broadest index available for the US equity market, around US$1 trillion was lost during the week. That made it the second worst week since October 2008 -- the height of the financial crisis. Stocks eventually halted their downward slide on Friday, with the Dow ending the day just above the break-even mark despite ongoing gloom about the state of the global economy. The bounce-back came despite a tepid view of policymakers' responses to the rekindled crisis. A pledge from G20 finance ministers to mount a powerful response to global recovery threats appeared to do little to assuage fears. The finance chiefs noted "heightened downside risks from sovereign stresses, financial system fragility, market turbulence, weak economic growth and unacceptably high unemployment." That drew a muted response on Wall Street. "The market is worried about the European situation and that the officials are moving too slow in terms of their action of getting things under control," said Scott Marcouiller of Wells Fargo Advisors. "It's fear and uncertainty, the two things that the markets hate the most, it is continuing to dominate the marketplace." The Dow ended the week down 6.4 per cent at 10,771.48 points. The broader S&P 500 fell 6.5 per cent to 1,136.43 and the tech-heavy Nasdaq Composite fell 5.3 per cent to 2,483.23. Traders predicted more choppiness ahead. "It's going to be a period of tremendous volatility," said Gina Martin of Wells Fargo Securities. "It will depend on what happens with policy in Europe, fiscal policy in the US, and probably the eco data and how much weaker the eco data gets. "We're starting to price in weaker data, it's just a matter of how much weaker the economy gets. If the data says a recession is more likely the market will suffer." --AFP |
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