WORLD> America
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WORLD> America
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US stocks plunge anew as data points to recession
(Agencies)
Updated: 2008-10-16 09:30
Fed Chairman Ben Bernanke offered a similar opinion, warning in a speech Wednesday that patching up the credit markets won't provide an instantaneous jolt to the economy. "Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," he told the Economic Club of New York. Analysts have warned that the market will see continued volatility as it tries to recover from the devastating losses of the last month, including the nearly 2,400-point plunge in the Dow over the eight sessions that ended Friday. Such turbulence is typical after a huge decline, but the market's anxiety about the economy was also expected to cause gyrations in the weeks and months ahead. Selling accelerated in the last hour of trading, a common occurrence during the eight days of heavy declines. One reason for the heavy selling: Mutual funds need to unload stock to pay investors who are bailing out of the market. Investors apparently have come to believe that Monday's big rebound over the banking sector was overdone given the problems elsewhere in the economy. "It really doesn't come as a shock after Monday's gains were, I think, a little bit excessive," said Charles Norton, principal and portfolio manager at GNICapital, referring to the market's pullback. He contends that the government has taken so many steps to help the financial system that investors must now wait for some of the actions to help steady the economy. "It seems like all the tools in the tool chest have mostly been used now and now it's back to reality," he said. "We're still faced with the fact that the economy is slowing and earnings aren't very good." |
