U.S. stocks were
thrashed Thursday, with the major indexes taking their hardest single-day hit
in five weeks, amid widespread selling of stocks and commodities on escalated
fears about the global economy.
After falling almost 528 points during the
session, the Dow Jones Industrial Average DJIA -3.51% finished with a drop of 391.01 points, or 3.5%,
at 10,733.83.
The battering left the Dow nearly 14 points above its lowest
close for the year and represented its steepest drop since Aug. 18.
All 30 of the blue-chip index’s components
lost ground, with United Technologies Corp. UTX +0.16% hardest hit, its shares tumbling 8.8%.
The negative
sentiment taking hold among investors is “driven by the bank runs in Europe,
and some of the European banks are rumored to be looking in the Middle East for
capital; it’s like a replay of 2008 for some of the U.S. banks,” said Charlie
Smith, chief investment officer at Fort Pitt Capital.
“When you talk
about bank recapitalizing and going to places like Dubai to do it, everything
echoes back to 2008 except economic fundamentals,” said Lazard’s Hogan.
U.S. stocks were
part of a global stock selloff as investors also reacted to the Federal
Reserve’s statement late Wednesday. The central bank warned of risks to the
economic outlook and unveiled a bond-swap program, seen as something that would
have minimal sway in revitalizing growth.
“The Fed cannot
engender growth; the Fed cannot engender risk-taking. What it can do is buffer
declines, but let’s see a real decline,” said Smith at Fort Pitt Capital,
pointing out that the S&P 500 is down 5.8% for the year to date, on a total
return basis. “Let’s talk when we make it 18% or 20%. The Fed is going to hold
their fire until they see the whites of people’s panicked eyes.”
Credit -marketwatch
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