Thursday, August 4, 2011

US stocks plunge amid recession fears

The US stocks have plunged by over 3 percent.

Source: Press TV

Wall Street has witnessed its worst day since the financial crisis, as shares tumbled over fears of a new economic meltdown.

At 1600 GMT, the Dow Jones Industrial Average was down 3.5 percent in closing trade and at one point had lost more than 400 points, the Standard & Poor's 500-stock index dropped 3.3 percent in late trading, over a 10 percent drop from its April peak, and the tech-heavy Nasdaq Composite shed 3.4 percent, The Wall Street Journal reported on Thursday.

The decline marked the biggest single-day loss since Dec. 1, 2008, when the stocks plunged 679.95 points in one of the market's worst days ever.

“This is a fear-driven market. We're in a mini-free fall. It's not a Black Monday, or Black Thursday, but it's in pretty bad shape--all the big stocks are being liquidated,” said Christian Thwaites, president and chief executive at Sentinel Investments.

Oil has also fallen to its lowest level in months over sapping demand in the world's biggest consumer.

“The concern is that you're seeing visible worry by government officials, by central bankers. The [worry] is, 'Are there any bullets left in the government arsenal to help?'” said Russ Koesterich, iShares Global Chief Investment Strategist at Blackrock. “Investors are realizing that the economy is very fragile, [but] it's not clear that governments are able to do much help.”

In a report on the US economy released Thursday, analysts at ING-US (Internationale Nederlanden Groep), a financial institution offering banking, insurance, and asset management services, said, “Three years into the recovery US growth remains feeble. The US is starting to look more and more like Japan in the 1990s.”

The US Department of the Treasury says the country's debt has topped 100 percent of its gross domestic product (GDP) amid concerns over the slow pace of economic recovery.

According to the default-preventing compromise bill, the US debt ceiling was raised by $2.4 trillion, to reach a total of $16.7 trillion, just a few hours before the August 2 deadline.

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