Tuesday 16th December, 2008

 

Wall Street stumbles on bleak news

 
 
 
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Facing bleak new data from America’s manufacturing sector, Wall Street stumbled yesterday as the US central bank, the Federal Reserve, sat down for a two-day meeting that may conclude with yet another cut in interest rates.

Economists expect the Fed to lower its benchmark overnight rate, currently set at 1 per cent, by a quarter or half of a percentage point, but they said they doubted another rate cut would have much immediate impact on stock markets or the mentality of shell-shocked investors.

The Dow Jones industrial average fell 65.15 points, or 0.8 per cent, to close at 8,564.53. The broader Standard & Poor’s 500-stock index lost 1.3 per cent, while the technology-heavy Nasdaq composite index dropped 2.1 per cent.

Two new reports showed that industrial production in New York State and across the country continued to slide in the last months of the year, and that businesses were bracing for a slow 2009.

Goldman Sachs, which is expected to end an 80-year string of positive earnings today by posting its first quarterly earnings loss, fell more than 2 per cent in afternoon trading. Shares of Morgan Stanley, which is expected to post a quarterly loss of 37 cents a share tomorrow, fell 1.4 per cent.

Shares of General Motors and the Ford Motor Company both enjoyed a rebound on yesterday, after the Bush administration said last week that it was prepared to intervene to prevent the collapse of the Big Three car companies after Republican senators blocked a rescue plan. Investors fear that a collapse of the automakers would have dire repercussions for companies around the world.

In Europe, markets finished lower. The FTSE 100 index in London and the DAX in Frankfurt closed down slightly while the CAC 40 in Paris lost 0.87 per cent.

Markets in Asia shrugged off gloomy economic data to advance. In Tokyo, the benchmark Nikkei 225 average rose 5.2 per cent, while the S&P/ASX 200 in Sydney gained 2.3 per cent. The Hang Seng index in Hong Kong rose 1.9 per cent, while the Shanghai Stock Exchange composite index advanced 0.5 per cent.

(The New York Times)