Fri 10 October 2008


US stocks fell again Thursday as selling of car makers such as General Motors and financial stocks such as Morgan Stanley fed on itself, sending major indexes into freefall. The Dow Jones Industrial Average lost almost 679 points, for its the worst seven-session performance since the one that ended Oct. 26, 1987. Traders on the floor of the New York Stock Exchange sounded harried, and emotions ran high on at least one Wall Street trading desk. For Thursday's session, the Dow Jones Industrial Average slid 678.91 points (7.33%) to 8,579.19, its lowest close in more than five years and comparable to the 777-point decline of Sept. 29, the biggest point-decline of its history. Trade was volatile again, with the Dow up more than 150 points at one stage. Fear indicators, such as the Chicago Board Options Exchange volatility index, hit all-time highs. The VIX is known as the market's "fear gauge" because traders pay up for protection when nerves are jangled. In economic news, economists in a Wall Street survey now expect gross domestic product to contract in the third and fourth quarters of this year, as well as the first quarter of 2009, the first time survey forecasts for those periods have turned negative. Initial jobless claims fell 20,000 on a seasonally-adjusted basis to 478,000 in the week ended Oct. 4. Meanwhile, wholesale inventories increased by 0.8% to a seasonally adjusted $445.39bn.

Base metals held onto early gains and closed mostly higher Thursday despite a pullback in US stock markets. West Texas Intermediate was last quoted at US$86.59 per barrel. Gold futures consolidated some of their recent gains as apparent profit-taking set in, traders and analysts said. Spot gold was last quoted at $911.50. The dollar and the euro declined against the yen Thursday as another afternoon drop in US stock markets ran roughshod over signs of optimism earlier in the day regarding the global financial crisis. At 08:03 a.m. (AET) the US dollar was quoted at 0.7363 euros, 99.74 yen and 58.54 pence.

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