DOW Plunges to 11-Year Low as Investors ‘Throw in Towel’
New York stocks fell to their lowest level for more than eleven years last night amid fears that the United States, the world’s largest economy, is spiralling into a far deeper recession than once thought.
The Dow Jones industrial average dropped by 250.89 points – or 3.5 per cent – to 7,114.78, its lowest level since May 1997.
Investors dumped shares even after Washington sought to reassure stockholders that they did not want to nationalise America’s banks – a move that would see shareholders effectively wiped out. The stock market fall came despite the US Treasury saying that it would launch a revamped bank rescue scheme this week.
Traders fretted yesterday that continuing losses incurred at US banks would force the hand of the White House and compel the Government to nationalise some financial institutions. It is feared that a number of banks will fall farther into the red as America’s property market shows no sign of recovery and unemployment continues to rise at an astonishing rate. According to the latest official data, about 6.7 per cent of the US workforce is out of a job. Many on Wall Street expect the unemployment rate to hit about 9 per cent by the end of the year.
The Dow Jones industrial average dropped by 250.89 points – or 3.5 per cent – to 7,114.78, its lowest level since May 1997.
Investors dumped shares even after Washington sought to reassure stockholders that they did not want to nationalise America’s banks – a move that would see shareholders effectively wiped out. The stock market fall came despite the US Treasury saying that it would launch a revamped bank rescue scheme this week.
Traders fretted yesterday that continuing losses incurred at US banks would force the hand of the White House and compel the Government to nationalise some financial institutions. It is feared that a number of banks will fall farther into the red as America’s property market shows no sign of recovery and unemployment continues to rise at an astonishing rate. According to the latest official data, about 6.7 per cent of the US workforce is out of a job. Many on Wall Street expect the unemployment rate to hit about 9 per cent by the end of the year.
The broader-based S&P 500 share index dropped by 3.5 per cent to its lowest close since April 1997.
Keith Springer, of Capital Financial Advisory Services, said: “People left and right are throwing in the towel.” He added: “The biggest thing I see here is the incredible pessimism. The Government is doing a lousy job of alleviating fears.”
The Treasury and other agencies issued a statement after The Wall Street Journal reported that Citigroup was in talks for the Government to boost its stake in the bank to as much as 40 per cent. Analysts said that the market, which initially rose after the statement, wanted more details of the Government’s plans.
source: www.timesonline.co.uk
