09/03/2008
U.S. stocks fell in skittish trade on Wednesday as signs of increasingly sluggish growth in the world economy left investors worried about the outlook for consumer spending and corporate profits.
Investors sold tech bellwethers such as Intel Corp and International Business Machines Corp on fears that the sector has the most exposure to the global economy.
The 15-country Euro zone reported on Wednesday that its economy shrank 10.2 % in the second quarter. A stronger dollar was another headwind for Techs, as it makes U.S.-manufactured products less competitive abroad. A continued slide in oil, which dipped below $108 a barrel on Wednesday, failed to spark optimism, with investors instead calling it a symptom of slowing global demand.
U.S. crude fell nearly 30 percent since hitting a record high above $147 per barrel in July. "Global growth is still a concern. Now we are seeing weakening growth in Europe and, to a lesser extent, Japan and now even emerging markets," said Brian Gendreau, investment strategist at ING Investment Management in New York. "If that's why oil prices are down, that isn't necessarily good for stocks." The Dow Jones industrial average was down 84.10 points, or 0.73 percent, at 11,432.82. The Standard & Poor's 500 Index was down 10.36 points, or 0.81 percent, at 1,267.22. The Nasdaq Composite Index was down 23.66 points, or 1.01 percent, at 2,325.58.
The contraction in the euro zone economy in the second quarter was the first quarter-on-quarter decline since the data series for the euro zone started in 1995. The wider 27-country European Union had a decline of 0.1 percent in the second quarter, the EU statistic office reported. A weakening global economy would compound the outlook for corporate America since demand from abroad has served as a lifeline for the U.S. economy as it grapples with the housing slump.
Submit this story to:
Digg
Del.icio.us
Technorati
