Global Markets Tumble
U.S. stocks continued a relentless sell off at the opening bell today as fears of global recession continue to overtake government efforts to address the financial crisis.
The Dow Jones industrial average fell below 8,000 today, or 8 percent, a 682 point drop at the opening bell. The broader Standard & Poor's 500 fell 7 percent and the Nasdaq fell 6 percent. The market is headed toward eight days of losses as it faces deepening fears about the financial crisis and its spillover to other parts of the economy. Traders have consistently shrugged off drastic government efforts to address the problem, from a global rate cut to plans to buy toxic mortgage debt. The Bush administration is now hammering out the final details of a plan that would allow the government to inject cash into banks in exchange for ownership stakes.
The underlying economy remains weak, analysts say, and the credit markets are tight as lenders remain reluctant to lend to each other.
The near paralysis of the credit markets partly led Standard & Poor's to put General Motors and Ford on credit watch late yesterday. They also face a weakening global auto market and were up nearly 5 percent in early trading.
The financial sector continues to be among the hardest hit. Morgan Stanley continues to face investors concerns that Mitsubishi UFJ Financial Group may abandon plans for a $9 billion investment in the firm, which the companies have denied. Its' stock is down 23 percent.
General Electric reported a 22 percent decline in net income this morning that met its lowered forecast and said it is on track to earn $20 billion this year. GE "is well positioned to perform in a very difficult environment," said Jeff Immelt, the company's chairman and chief executive.
The U.S. turbulence spilled overseas today where fear of a global recession plummeted stocks. In Japan, the Nikkei fell nearly 10 percent for the second time this week. London's FTSE, Germany's Dax and Paris' CAC were all down 9 percent.
There is a bright spot for American consumers: Oil prices also continued a steep two-month decline today, falling $3.79, or 4 percent, to $82.80 a barrel as traders bet that the slowing global economy will reduce demand for energy worldwide. That should eventually flow through to American consumers' gasoline bills and could boost consumer spending.
