Wednesday, October 15, 2008
NEW YORK, Oct 15 (Reuters) – Investors scurried to safe-havens on Wednesday, with global stock prices falling sharply, as fear of a deepening worldwide slowdown wiped away optimism seen earlier this week over governments’ bold steps to avert a financial meltdown.
Gold climbed more than 1 percent, shorter-term euro zone and U.S. government debt gained and the less-risky yen rallied after U.S. data pointed to a quickly slowing U.S. economy.
U.S. retailers posted their biggest monthly sales decline in more than three years in September, the Commerce Department said. Also, a gauge of manufacturing in New York state tumbled in October to the lowest since its inception in 2001, the New York Federal Reserve Bank reported.
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“The bottom line is that consumers acted like a deer caught in the headlights of a fast-moving car,” said Fred Dickson, director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon.
“They stepped back and dramatically slowed shopping in September, another indication of how quickly the economy is slowing.”
Stock markets on both sides of the Atlantic declined more than 3 percent on the growing realization that global growth is slowing down. Most companies will have to lower their profit estimates for 2009, said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.
“People are realizing there are interesting tools being put in place to deal with the credit crisis, but there’s going to be a lag time to get them to work,” Hogan said.
In such a scenario, “the path of least resistance in this market is down.”
At 10:15 a.m., the Dow Jones industrial average .DJI was down 281.95 points, or 3.03 percent, at 9,029.04. The Standard & Poor’s 500 Index .SPX was down 34.13 points, or 3.42 percent, at 963.88. The Nasdaq Composite Index .IXIC was down 34.22 points, or 1.92 percent, at 1,744.79.
In Europe, the FTSEurofirst 300 index of top European companies was down 4.73 percent at 920.41 points.
Oil prices fell to their lowest in 13 months, dragged down by expectations that economic weakness will cut further into demand for crude.
This article was posted: Wednesday, October 15, 2008 at 11:46 am