US stocks retreat from two-day rally on new recession warnings

April 3rd, 2008 - 5:51 am ICT by admin  

New York, April 3 (DPA) After a two-day rally, US stocks retreated again on Wednesday with the first public remarks by the US central bank head that a recession was possible. The remarks by Federal Reserve Chairman Ben Bernanke followed months of comment by economists who believe the US is already in a recession.

Bernanke told Congress that it appeared “likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly”.

“A recession is possible,” he said.

In addition, Bloomberg financial news agency cited a document from the International Monetary Fund (IMF) saying there is a 25 percent chance of a world recession.

The document described the US financial crisis as the worst in the US since the Great Depression.

The document was obtained by Bloomberg at a meeting of Southeast Asian deputy finance ministers and central bankers in Da Nang, Vietnam. It shaved projected world growth from 4.1 percent to 3.7 percent for 2008.

The IMF is to officially release its new forecasts next week, ahead of the IMF-World Bank spring meetings April 12 and 13.

On Wall Street, Microsoft Corp and General Electric led technology and industrial shares lower.

The blue-chip Dow Jones Industrial Average shed 48.53 points, or 0.38 percent, to 12,605.83. The broader Standard & Poor’s 500 Index lost 2.65 points, or 0.19 percent, to 1,367.53. The technology-heavy Nasdaq Composite Index dropped 1.35 points, or 0.06 percent, to 2,361.40.

The US currency dropped against the euro to 63.73 euro cents from 64.103 euro cents Tuesday. The dollar continued gaining against the Japanese currency to 102.29 yen from 101.95 yen Tuesday.

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