Shares sink over gloomy reports
American investors have yanked money out of stocks after new reports from the US and China pointed to a sharp slowdown in manufacturing.The Dow Jones industrial index plunged 251 points, the second-biggest drop this year.
Losses in energy and materials companies led a widespread rout on the US stock market. The Dow started sinking after 10am, when the Philadelphia branch of the Federal Reserve reported a sharp contraction in manufacturing in the north east of the US. The losses accelerated throughout the day.
The bad news kept piling up as the day went on. Mining and other companies that made basic materials fell hard after prices for commodities such as copper and oil dropped.
Goldman Sachs analysts advised their clients to bet that stocks would fall, and speculation swirled that Moody's would cut the credit ratings of 17 banks.
The Dow lost 250.82 points to close at 12,573.57, a drop of 2%. Alcoa lost 37 cents to 8.55 US dollars.
A new report that manufacturing slowed in China was troubling since that country's economy has helped drive global economic growth over the past four years. China is a major importer of copper and other basic materials.
The Standard & Poor's 500 index lost 30.18 points to 1,325.51, a decline of 2.2%. The Nasdaq composite fell 71.36 points, 2.4%, to 2,859.09. All three indexes lost their gains for the week.
The late-morning blows to investor confidence were just the latest reasons for people to pull money of out stocks. Earlier, the US Labour Department reported that the four-week average of applications for unemployment benefits, a figure closely watched by economists, jumped to the highest level since September. The National Association of Realtors also reported that sales of previously-occupied homes dropped 1.5% last month.
All this came a day after the Federal Reserve slashed its estimates for US economic growth and said it would extend a bond-buying programme through the end of the year, disappointing investors who had hoped for bolder steps from the central bank to get the economy going again.
The Dow lost 250.82 points to close at 12,573.57, a drop of 2%. Alcoa lost 37 cents to 8.55 US dollars.
A new report that manufacturing slowed in China was troubling since that country's economy has helped drive global economic growth over the past four years. China is a major importer of copper and other basic materials.
The Standard & Poor's 500 index lost 30.18 points to 1,325.51, a decline of 2.2%. The Nasdaq composite fell 71.36 points, 2.4%, to 2,859.09. All three indexes lost their gains for the week.
The late-morning blows to investor confidence were just the latest reasons for people to pull money of out stocks. Earlier, the US Labour Department reported that the four-week average of applications for unemployment benefits, a figure closely watched by economists, jumped to the highest level since September. The National Association of Realtors also reported that sales of previously-occupied homes dropped 1.5% last month.
All this came a day after the Federal Reserve slashed its estimates for US economic growth and said it would extend a bond-buying programme through the end of the year, disappointing investors who had hoped for bolder steps from the central bank to get the economy going again.
© 2013 Press Association