US stocks down on Fed outlook, oil prices

June 12th, 2008 - 8:59 am ICT by IANS  

New York, June 12 (DPA) Major US stock indices plunged Wednesday as the price of oil climbed, financial shares plummeted and the Federal Reserve warned the economy has remained sluggish over the last two months. The US central bank said economic activity had “remained generally weak” in late April and May, according to its survey compiled from the reports of 12 district branches around the country.

The so-called Beige Book report said consumer spending had slowed in the past months due to rising energy and food prices.

Crude oil climbed more than $5 to $136.38 per barrel on a US government report that showed stockpiles dropped more than anticipated on the week.

Shares of financial companies were hit hardest on the day, falling a combined 3.3 percent on reports that some have underestimated losses stemming from the subprime mortgage crisis.

The blue-chip Dow Jones Industrial Average plunged 205.99 points, or 1.68 percent, to 12,083.77. The broader Standard & Poor’s 500 was down 22.95 points, or 1.69 percent, to 1,335.49. The technology- heavy Nasdaq Composite Index fell 54.93 points, or 2.24 percent, to 2,394.01.

The US currency dropped against the euro to 64.29 euro cents from 64.66 euro cents Tuesday. The dollar also lost against the Japanese currency to 106.97 yen from 107.37 yen.

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