U.S. stocks werethrashed Thursday, with the major indexes taking their hardest single-day hitin five weeks, amid widespread selling of stocks and commodities on escalatedfears about the global economy.
After falling almost 528 points during thesession, the Dow Jones Industrial Average DJIA -3.51% finished with a drop of 391.01 points, or 3.5%,at 10,733.83.
The battering left the Dow nearly 14 points above its lowestclose for the year and represented its steepest drop since Aug. 18.
All 30 of the blue-chip index’s componentslost ground, with United Technologies Corp. UTX +0.16% hardest hit, its shares tumbling 8.8%.
The negativesentiment taking hold among investors is “driven by the bank runs in Europe,and some of the European banks are rumored to be looking in the Middle East forcapital; it’s like a replay of 2008 for some of the U.S. banks,” said CharlieSmith, chief investment officer at Fort Pitt Capital.
“When you talkabout bank recapitalizing and going to places like Dubai to do it, everythingechoes back to 2008 except economic fundamentals,” said Lazard’s Hogan.
U.S. stocks werepart of a global stock selloff as investors also reacted to the FederalReserve’s statement late Wednesday. The central bank warned of risks to theeconomic outlook and unveiled a bond-swap program, seen as something that wouldhave minimal sway in revitalizing growth.
“The Fed cannotengender growth; the Fed cannot engender risk-taking. What it can do is bufferdeclines, but let’s see a real decline,” said Smith at Fort Pitt Capital,pointing out that the S&P 500 is down 5.8% for the year to date, on a totalreturn basis. “Let’s talk when we make it 18% or 20%. The Fed is going to holdtheir fire until they see the whites of people’s panicked eyes.”
Credit -marketwatch
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