US stocks continue week’s plunge on recession fears

October 11th, 2008 - 6:48 am ICT by IANS  

Washington, Oct 11 (DPA) US stocks swung wildly Friday amid fears of a widening global credit crunch and recession.The Dow Jones Industrial Average was down more than 4 percent by early afternoon in a wild trading day on Wall Street. The Dow plunged nearly 700 points to below 8,000 within minutes of opening, but had roared all the way to its starting point about 30 minutes later amid widespread uncertainty over the state of the US economy.

After rebounding from another over-500-point drop in the afternoon, the Dow was at 8,901.28 points, but lost again at closing.

At the end of a roller coaster day, the Dow closed down just 128 points, or 1.49 percent, to 8,451.19. The broad-based Standard and Poor’s 500 tumbled 10.70 points, or 1.18 percent, to 899.22. The high-tech Nasdaq Composite index gained 4.39 points, or 0.27 percent, to 1,649.51.

“The markets are being driven by emotion and rumour,” Alan Gayle, a strategist at Ridgeworth Investments, told Bloomberg News.

Financial, energy and retail stocks led the retreat. Retail giant Macy’s Inc dropped as much as 19 percent on a poor profit forecast, while Exxon Mobil Corp was down 12 percent as crude oil fell below $80 dollars per barrel in New York.

The dollar rose against the Japanese currency to 100.62 yen from 99.62 yen on Thursday. The dollar also rose against the euro to 74.60 euro cents from 73.54 euro cents on Thursday.

Stocks around the world also plummeted Friday and some countries temporarily halted trading as US and global moves to shore up financial institutions were unable to reduce fears that a recession was on the horizon.

Finance ministers and central bank heads from the Group of Seven (G7) industrial nations met in Washington Friday for the first time since the financial crisis spun out of control last month.

While the bloc hoped to quell some of the market fears and show the world was unified in tackling the financial turmoil, it was reluctant to offer a common, cross-border solution to shore up banks on the brink of bankruptcy in their own countries.

German Finance Minister Peer Steinbrueck said the German government was open to taking a stake in its banks in order to help inject capital into the sector and warned that “case-by-case” interventions were no longer possible.

But he also said the type of government interventions would have to differ from country to country and did not suggest an international plan was in the works.

International Monetary Fund Managing Director Dominique Strauss-Kahn warned Friday that the only way to restore market confidence was through “government intervention which is clear, comprehensive and cooperative among countries”.

US President George Bush offered assurances Friday that his government was doing all it could to keep the world’s largest economy afloat.

Bush said a “startling” drop in US stocks in the last few days was being “driven by uncertainty and fear” and insisted the US already had all the tools necessary to resolve the financial crisis.

“This has been a deeply unsettling period for the American people,” Bush acknowledged. “We will continue to act to resolve this crisis and restore stability to our markets.”

However, Bush announced no new moves to ease the US credit crunch that has curbed the availability of loans to consumers and small businesses.

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