Wall Street waffles as economic gloom deepens
Sunday, 7 December 2008
NEW YORK, Dec 6 (AFP): Wall Street's roller-coaster ride saw more gut-wrenching turns over the past week as investors came to terms with what appears to be a deep and painful economic slump.
The market faced an official declaration that the US economy is in recession-and has been for a year-and indications that conditions may be worsening.
In the week to Friday, the Dow Jones Industrial Average fell 2.19 per cent to 8.635.42, following a stunning 9.73 per cent rise in the prior week.
The tech-studded Nasdaq shed 1.71 per cent to 1,509.31 and the broad-market Standard & Poor's 500 declined 2.25 per cent to 876.07.
The market action was highly volatile as signs of deeper economic troubles resurfaced. One official report showed the US economy shed 533,000 jobs in November and over one million in the past three months, pushing the unemployment rate to a 15-year high.
"Just when you thought that the US economic outlook couldn't get any uglier, it goes ahead and does," said Meny Grauman, economist at CIBC World Markets.
Other surveys showed extremely weak readings on the factory and service sectors, and reports from retailers showed consumers still clinging tightly to their wallets.
On December 2, the National Bureau of Economic Research, the panel recognized as the official arbiter of business cycles, said the US recession began in December 2007, ending any doubt about the slump.
Although a recession is generally defined as two consecutive quarters of declining activity, the panel has its own criteria for determining a downturn, including data on employment, income and industrial output.
Some analysts said the fact that the downturn began a year ago suggests recovery may be coming soon.
The panic in global financial markets has sparked an unprecedented rush into safe US Treasury securities, driving yields on short-term government notes down to almost zero.
The yield on the 10-year Treasury bond sank to 2.657 per cent from 2.957 per cent a week earlier, and that on the 30-year Treasury bond slid to 3.110 per cent against 3.487 per cent.
The drop in yields to near historic lows reflect higher bond prices.
In the coming week, the markets will be tested with data on the US trade balance and a key report on retail spending, crucial to any economic recovery.
The market faced an official declaration that the US economy is in recession-and has been for a year-and indications that conditions may be worsening.
In the week to Friday, the Dow Jones Industrial Average fell 2.19 per cent to 8.635.42, following a stunning 9.73 per cent rise in the prior week.
The tech-studded Nasdaq shed 1.71 per cent to 1,509.31 and the broad-market Standard & Poor's 500 declined 2.25 per cent to 876.07.
The market action was highly volatile as signs of deeper economic troubles resurfaced. One official report showed the US economy shed 533,000 jobs in November and over one million in the past three months, pushing the unemployment rate to a 15-year high.
"Just when you thought that the US economic outlook couldn't get any uglier, it goes ahead and does," said Meny Grauman, economist at CIBC World Markets.
Other surveys showed extremely weak readings on the factory and service sectors, and reports from retailers showed consumers still clinging tightly to their wallets.
On December 2, the National Bureau of Economic Research, the panel recognized as the official arbiter of business cycles, said the US recession began in December 2007, ending any doubt about the slump.
Although a recession is generally defined as two consecutive quarters of declining activity, the panel has its own criteria for determining a downturn, including data on employment, income and industrial output.
Some analysts said the fact that the downturn began a year ago suggests recovery may be coming soon.
The panic in global financial markets has sparked an unprecedented rush into safe US Treasury securities, driving yields on short-term government notes down to almost zero.
The yield on the 10-year Treasury bond sank to 2.657 per cent from 2.957 per cent a week earlier, and that on the 30-year Treasury bond slid to 3.110 per cent against 3.487 per cent.
The drop in yields to near historic lows reflect higher bond prices.
In the coming week, the markets will be tested with data on the US trade balance and a key report on retail spending, crucial to any economic recovery.