As of 12:30 Thursday Afternoon, US stock markets are down between 3.5% to 3.9%. After stocks fell in Asian and Europe over night. Economic data, and other signals from all directions are indicating a global slowdown, possible even another plunge into a global recession. While government leaders throughout the world continue to pursue austerity and spending cuts -- the exact opposite of the policies economists say is what we need to reverse this emerging downward spiral.
More than $3.2 trillion of market value has been wipe of US assets since highs in April. It looks as if today we might achieve the 20% drop traders use to indicate a bear market, that often precedes an upcoming recession.
Rita Nazareth, U.S. Stocks Tumble on Global Growth Concerns
The Standard & Poor’s 500 Index slumped 3.9 percent to 1,146.97 at 11:40 a.m. in New York. All 10 groups in the S&P 500 dropped at least 1.6 percent. The Dow Jones Industrial Average fell 421.44 points, or 3.7 percent, to 10,998.77. Treasuries rallied, pushing 10-year yields to a record low.
“It’s almost like a worldwide buyers strike,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “There’s a general malaise on global economic activity.
The S&P 500 has fallen 16 percent from a three-year high on April 29 amid concern about Europe’s debt crisis and an economic slowdown. Financial, industrial and commodity producers had the biggest declines during that period, dropping at least 19 percent.
More than $3.2 trillion was erased from U.S. equity values between April 29 and Aug. 8, leaving the benchmark gauge for U.S. shares within 29 points of entering a bear market on a closing basis. Both European shares and the Russell 2000 Index of small U.S. companies entered a bear market last week, falling at least 20 percent from their previous highs. ...
The U.S. and Europe are “dangerously close to recession,” Morgan Stanley analysts including Chetan Ahya said in the note. “Recent policy errors, especially Europe’s slow and insufficient response to the sovereign crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets and eroded business and consumer confidence.”
So the worm turns.
The Associated Press reports, in The China Post reports on Asian stock markets in Economic fears hit stocks again
Stocks are down across the globe. I've just read five different articles and each sites a different reason. Fears of a global recession, after downbeat export, declining retail sales, excess debt in weak European sales, data showing weakening economies, and declining consumer confidence are all mentioned as causal factors.
In Japan, the finance ministry said July exports fell 3.3 percent from a year earlier to 5.78 trillion yen (US$75.6 billion) as a result of the strong yen and the ongoing impact of the March 11 earthquake and tsunami.
In Britain, official statisticians reported that retail sales rose by only 0.2 percent in July from the month before. That was down on June's equivalent rate of 0.8 percent and below market expectations for a 0.4 percent rise — in another sign that the British economic recovery is running out of steam.
Britain's FTSE 100 lost 1.7 percent to 5,242 while Germany's DA-- fell 2.8 percent to 5,852.32. France's CAC-40 was down 2.1 percent to 3,189. ...
Earlier in Asia, Japan's benchmark Nikkei 225 closed down 1.3 percent to 8,943.76. Hong Kong's Hang Seng shed 1.3 percent at 20,016.27, while mainland Chinese shares lost ground for a third straight trading day on concerns over a possible interest rate hike and new restrictions aimed at cooling housing prices.
The Shanghai Composite Index lost 1.6 percent to 2,559.47 and the Shenzhen Composite Index lost 1.8 percent to 1,142.91.
Sydney shed 1.22 percent, or 52.7 points, to 4,251.2 on profit taking and Seoul dropped 1.70 percent, or 32.09 points, to 1,860.58.
Meanwhile, in Washington, our Congressional Super Committee is still planning on cutting $1.5 trillion out of government spending, in a tragidy of errors that would be comic, if it were not so stupid.
Economists Robert Reich and Paul Krugman suggest that unless we do the exact opposite, and expand government spending to simulate jobs, wages, and economic growth we will be headed to a double dipper recession, if not lessor depression.
And, our clueless TeaParty Freshmen House members continue to foment the lie that cutting government increases jobs, not reduces them.
We are witnessing another tragic historical episode similar to the Smoot-Hawley Tariff of 1930, where in an effort to protect farmer revenues during a downturn, Washington politicians set of global rounds of trade wars which are often sited as one of the aggravating causes of the Great Depression.
We are watching a slow motion train wreck, where all the parties are continuously warned, day by day, of the consequences of their actions, and inaction, yet they persist oblivious to any learning.
History will not to be kind.
Fasten your seat belts.
Turbulence ahead.