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US markets plunge on uncertainty

20 August 2009 07:15 (UTC +04:00)

Baku -APA-Economics. Uncertainty about the global economy is sending stocks lower once again.
Stocks fell moderately in light trading Wednesday after zigzagging earlier in the week. Overseas markets dropped as well, with the Shanghai stock market tumbling 5 percent on concerns about a sustainable economic recovery in China. Major indexes in Europe were mostly lower.
More defensive industries like health care and utilities that hold up better in a weak economy outperformed the broader market, while technology, financial and industrial stocks showed the biggest declines. Meanwhile, Treasury prices rose as investors sought a safe place for their money. Prices for copper and silver, which depend on a healthy economy to drive demand, fell.
Investors are still battling concerns about consumer spending that have stalled stocks’ summer rally. Hewlett-Packard Co. on Tuesday became the latest big company to report ongoing weakness in sales that sent its profit down 19 percent in the most recent quarter.
In late morning trading, the Dow Jones industrials fell 27.58, or 0.3 percent, to 9,190.36. The Standard & Poor’s 500 index fell 3.03, or 0.3 percent, to 986.64, while the Nasdaq composite index fell 8.57, or 0.4 percent, to 1,947.35.
Overseas, Japan’s Nikkei stock average fell 0.8 percent. In afternoon trading, Britain’s FTSE 100 was down 0.01 percent, Germany’s DAX index was down 0.3 percent, while France’s CAC-40 rose 0.1 percent.
About three stocks fell for every two that rose on the New York Stock Exchange, where volume came to a light 285.1 million shares.
Bond prices rose as investors were drawn to the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.44 percent from 3.52 percent late Tuesday.
In other trading, the Russell 2000 index of smaller companies fell 1.68, or 0.3 percent, to 554.75.
In a sign of the market’s uneasiness, the Chicago Board Options Exchange’s Volatility Index, also known as Wall Street’s fear gauge, rose more than 3 percent. The VIX stands at 27.1, above its historical average of 18-20. But it’s still well below the record 89.5 it hit in October at the height of the financial crisis.
Losses in the market were subdued by a jump in energy stocks, which rose as oil prices climbed.
Oil prices moved above $70 a barrel Wednesday after the government reported a surprisingly big drop in crude storage levels, a sign that maybe energy demand is increasing. Light, sweet crude for September delivery added $1.25 to $70.44 a barrel on the New York Mercantile Exchange.
Investors received more insight into cost-conscious consumers as BJ’s Wholesale Club Inc. said its second-quarter profit dipped 4 percent and sales declined because of falling gasoline prices. Still, the warehouse-club’s results beat analysts’ estimates and it raised its full-year profit outlook.
Deere & Co., the world’s largest maker of farm equipment, reported a 27 percent drop in its fiscal third-quarter profit, as the global economic slowdown depressed sales of its products. But the results beat analyst expectations.
The dollar was mixed against other major currencies. Gold prices rose, while other metals prices fell. Source: AP