US braces itself for another market slide
Wall Street headed for another precipitous drop today as fears of a punishing global recession stirred panic among investors and sent world financial markets plunging.
The Dow Jones industrial average futures were down 550 points, the maximum allowed price change.
The increasingly grim outlook convinced investors that the world economy is headed for a long and severe downturn despite a series of government rescue efforts aimed at pulling the financial system from the brink.
Fearing more carnage in equity markets, big hedge funds and other institutional investors have been pulling out their money in a bid to reduce risk and raise cash.
Adding to the anxiety has been a group of poor corporate earnings and pessimistic fourth-quarter outlooks --indicating that the tremors caused by the global credit crisis may have not even begun to be felt.
In Japan, shares of Sony sank more than 14% after it slashed its earnings forecast for the fiscal year.
In Germany, Daimler’s stock dropped 11.4% in morning trading after it reported lower third-quarter earnings and abandoned its 2008 profit and revenue guidance.
Ahead of the market’s opening, Dow Jones industrial average futures fell the maximum allowed limit of 550, or 6.27%, to 8,224. That triggered an automatic freeze on selling.
Yesterday the Dow rose 172 points as investors went looking for bargains after two days of selling. Analysts have predicted that trading will remain volatile for the foreseeable future while investors test whether or not the market has hit a bottom.
Japan’s Nikkei stock average fell 9.60%. Britain’s FTSE 100 was down 5.95%, Germany’s DAX index was down 9.38%, and France’s CAC-40 was down 7.35%.
The US dollar, meanwhile, plunged below 93 yen, a 13-year low, as traders reacted to dismal US jobs data that spurred speculation the Federal Reserve might cut interest rates. Meanwhile, gold prices plunged.
