Economic worries pressure on markets

07:35, February 26, 2010      

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A batch of negative economic reports from the United States and Europe hit on the market sentiment and sent U.S. stocks lower on Thursday.

Wall Street opened sharply lower on Thursday after last week's initial unemployment benefit applications jumped surprisingly. Stocks fluctuated at low levels and Dow lost as much as 1.8 percent in morning trading.

The U.S. Labor Department reported that weekly jobless claims unexpectedly surged by 22,000 to 496,000 in the week ended on February 20, the highest level in more than three months, casting further shadows on the labor market.

U.S. stocks rallied on Wednesday after Federal Reserve Chairman Ben Bernanke pledged to keep its benchmark interest rates low for an extended period of time amid fragile economic recovery. Stocks pared early losses and rose in late afternoon trading. Tech-heavy Nasdaq managed to finished the day largely flat.

As of Thursday's closing, the Dow Jones tumbled 53.13, or 0.51 percent, to 10,321.03. The Standard & Poor's 500 index plummeted 2. 31, or 0.21 percent, to 1,102.93 and the Nasdaq edged down 1.68, or 0.08 percent, to 2,234.22.

A separate report from the U.S. Commerce Department demonstrated a mixed picture of manufacturing. Orders for durable goods increased 3.0 percent to a seasonally adjusted 167.91 billion dollars, which was twice as much as the economists had projected. However, orders fell by 0.6 percent excluding volatile transportation orders, while economists had expected an increase of one percent.

Negative news from Europe also weighed on market. Worries about the spreading of sovereign debt crisis in Europe resurfaced as Greece face potential downgrade risks.

Rating agency Standard & Poor warned of a near-term downgrade on Greece in a statement released on Wednesday. S&P said that if public support decreased and hindered the government's stability program, the nation's ratings could be downgraded.

Another rating agency Moody's echoed S&P's statement and warned of similar move in lowering Greece's debt ratings.

Moreover, the European Commission said economic sentiment in the 16 countries that use the euro worsened unexpectedly in February, which dragged the euro to a nine-month low against the dollar in earlier session.

Commodities prices were pressured as crude oil futures fell 1. 83 U.S. dollars to settle at 78.17 dollars a barrel on the New York Mercantile Exchange. Gold futures also fell. Energy and material stocks retreated.

Source: Xinhua
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