NEW YORK, Nov. 19 (Xinhua) -- Wall Street shares
plunged to their lowest level in five-and-a-half years Wednesday on deep
economic recession concerns.
A trader works on the floor of the New
York Stock Exchange, November 17, 2008. (Xinhua/Reuters
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The Dow Jones industrial average tumbled 427.47
points, or 5.07percent, to 7,997.28. It was the first time the Dow closed below
the 8,000 level since March 2003.
The S&P 500 and the Nasdaq broke through last
week's intraday lows, which were the lowest in more than five years. The
Standard & Poor's 500 Index fell 52.54 points, or 6.12 percent, to 806.58.
The Nasdaq Composite Index lost 96.85 points, or 6.53 percent, to 1,386.42.
Weak economic
outlook
"The cost of living in the United States fell by the
most on record and construction began on the fewest homes ever last month,
evidence the economy is in the worst recession in at least a quarter century,"
said Benjamin Wei, president of the New York International Group, an investment
bank based in New York. The October consumer price index (CPI) fell 1.0 percent,
more than the consensus 0.8 percent, and the biggest ever monthly drop, while
the core fell 0.1 percent, compared to a consensus 0.2percent increase, the
Labor Department said in Washington.
"Today's CPI report signals deflation, or a prolonged
price slide, may become another hazard facing Federal Reserve Chairman Ben S.
Bernanke and President-elect Barack Obama. Deflation could worsen the economic
downturn by making debts harder to pay off and countering the impact of Fed
interest-rate cuts," said Wei. Commerce Department figures showed housing starts
tumbled to an annual rate of 791,000, indicating the industry's contraction may
extend into a fourth year.
"October housing starts fell 4.5 percent to 791,000,
marginally above the 780,000 consensus, but permits tanked 12.0 percent
to708,000, much less than 774,000 consensus," said Ian Shepherdson, chief U.S.
economist at the High Frequency Economics Ltd., an economic research group.
"Alas the permits numbers are a better guide to the
underlying state of activity than starts, which are subject to weather effects.
So the 14.5 percent drop in single family permits is grim news, consistent with
the plunge in the homebuilders' survey, reported yesterday," he pointed out.
"Housing activity seems to have taken another hit
since the stock market plunge, along with most of the rest of the economy.
With construction at these levels, the inventory/sales
ratio for new homes ought to drop quite quickly over the next few months,
setting the scene for an eventual stabilization in prices, but right now housing
is a disaster area," added the economist.
Federal Reserve policy makers last month predicted the
U.S. economy will contract through the middle of 2009, with some prepared to
lower interest rates further in response, a record of their meeting showed
Wednesday.
Auto, financial stocks suffer Shares of General
Motors Corp plummeted to the lowest in 66years and Ford hit a 26-year low as
investors are concerned about a possible bankruptcy filing by U.S. automakers.
U.S. auto executives were on Capitol Hill for a
second day top lead their case for a 25-billion- U.S. dollar aid package.
However, prospects for a bailout getting done this week remained uncertain.
Citigroup, Bank of America, JPMorgan Chase & Co.,
and other financial stocks all slid to multiyear lows on persistent worries
about the fallout that worsening credit and a contracting economy will have on
banks.
Citigroup shares slumped a record 23 percent and
credit-default swap spreads on its debt widened after the bank took on more
than17 billion dollars in assets from structured investment vehicles and shut
another hedge fund.
Bank of America was down 14 percent while JPMorgan
shed 11.4percent. The S&P financial index skidded 11.6 percent. On Nasdaq,
shares of Yahoo slumped 20.9 percent after Microsoft Corp's chief executive
ruled out an acquisition of the Internet media company.
WASHINGTON, Nov. 18 (Xinhua) -- U.S. Treasury Secretary Henry Paulson expressed his reservations Tuesday to use the 700 billion dollar rescue package to help struggling auto makers.
"We needed the financial rescue package so we could intervene, stabilize our financial system, and minimize further damage to our economy," Paulson told a hearing of the House Financial Services Committee. Full story
WASHINGTON, Nov. 19 (Xinhua) -- Consumer prices in the United States plunged 1.0 percent in October, the biggest one-month drop in 61 years, dragged by declining energy costs, the Labor Department reported Wednesday.
The October drop in overall prices was twice as large as the 0.5 percent decline analysts expected. Full story
WASHINGTON, Nov. 19 (Xinhua) -- The U.S. Federal Reserve on Wednesday lowered its forecasts for economic growth this year and next, acknowledging the possibility of a recession into 2009.
The U.S. economy would remain "very weak" next year and
"the subsequent pace of recovery would be quite slow," according to the minutes
of the Fed's last policy-making meeting held late October. Full story
