US stock market slump continues

All eyes turn to US employment figures due out on Friday after Dow narrowly avoids ninth day in red It hasn’t happened since Jimmy Carter was in the White House and Abba ruled the charts. But US stock markets threatened to end trading down for the ninth day in a row, as worries about the state of the world’s largest economy continued to terrify the financial markets. The Dow Jones Industrial Average, the Wall Street index of leading US companies, was down more than 100 points at lunchtime and set to continue a losing streak that has lasted even longer than the trough in October 2008 after Lehman Brothers went bust and the global financial crisis began. In the event a last minute rally helped it narrowly avoid the ignominious record. After Lehman collapsed, the Dow fell for eight days in a row, but with investors worried about weakening economies in the US and Europe and political uncertainty in Washington and abroad, the Dow was on course on Wednesday to clock up a ninth day in the red – a run unseen since 22 February 1978, when the US was suffering a recession, an energy crisis and sky-high inflation. The comparison will be an uncomfortable one for Barack Obama. Some of his critics have taken to drawing parallels with Carter, whose one-term presidency was handicapped by financial crisis. Paul Dales, senior US economist at Capital Economics, said investors had already assumed a deal would be done, and that markets were being driven lower by fears that the economy is again weakening. “Now that the debt deal is done, people are focussing their attention on the economy, and the recent figures have been disappointing,” he said. Recent reports on gross domestic product and consumer spending had all been poor, he said. “The fundamentals are weak. It’s all about the economic data,” he said. Dales said all eyes were now on US employment figures due out on Friday. He said those numbers would be “pivotal”. “If those are weak then this slide will continue; if the numbers are strong, then it could ease fears,” he said. The US news and Europe’s continuing debt crisis spooked investors around the world. In London, the FTSE 100 dropped 2.3% to close at its lowest point since November last year, and markets in France and Germany suffered similar falls. Jack Ablin, chief investment officer of Harris Private Bank in Chicago, said: “Investors no longer believe we can rely on Washington to cushion the blow. We have had 30 years of [Federal Reserve chairmen] Greenspan and Bernanke cutting interest rates when the economy looked soft. Now the government is spending to create jobs, and it’s not working. Now we are in a situation where we have to let the chips fall where they may. That’s a very daunting prospect.” US economy United States Dow Jones Stock markets Global economy Economics Dominic Rushe guardian.co.uk

Posted by on August 3, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.