U.S. stocks fall sharply as investors' gloom grows

08:05, August 12, 2010      

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Wall Street fell sharply Wednesday as more bad news chipped away at investors' view of the U.S. economy.

The Dow Jones industrial average fell 265 points. The index has now fallen four days out of five, and it has lost 320 points in the past two days. Meanwhile, the yield on the Treasury's 10-year note fell to its lowest level since March 2009 as investors avoided stocks and sought the safety of government bonds.

Only 442 stocks rose on the New York Stock Exchange, while 2,627 fell, a sign that investors expect all businesses to suffer if the U.S. economy continues to weaken.
Investors' gloom deepened a day after the Federal Reserve said it would begin buying government securities as a way to stimulate the economy. News of slower industrial growth in China and a disappointing economic indicator in Japan helped send stocks plunging around the globe.

The U.S. Commerce Department said the trade deficit widened in June to its highest level in 20 months as exports dipped. Falling exports mean U.S. manufacturing could be slowing down.

Investors got more bad news after trading ended. Cisco Systems Inc.'s revenue in the company's latest quarter fell short of expectations.

Stock traders tend to buy and sell based on their expectations for what business will be like in six to nine months. The problem is that economic data has been so muddled lately that investors have no sense of whether the recovery will hold.
"Uncertainty, uncertainty, uncertainty," was the way that Javier Perez-Santalla, managing director for futures and foreign exchange at the institutional brokerage firm Dinosaur Group, described the mood in the market.

The Fed said Tuesday it will start buying government bonds with money it gets from the maturing mortgage-backed bonds that it bought during the recession. The goal is to try to cut interest rates on mortgages and corporate loans and in turn increase lending and help the economy grow faster.

But the Fed's moves were expected to be quite small in comparison to what the economy needs. And many investors were selling because the debt purchases would have only a limited impact on the economy.

The Dow dropped 265.42, or 2.5 percent, to 10,378.83, its largest slide since it fell 268.22 on June 29. The Nasdaq composite index fell 68.54, or 3 percent, to 2,208.63.

Source: Agencies / People's Daily Online

(Editor:梁军)

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