Financial crisis: US stock markets suffer worst week on record
Pastor Dale Morgan
*Financial crisis: US stock markets suffer worst week on record*
US stock markets have suffered their worst week on record following
another torrid day of trading despite growing hopes that the government
could step in to guarantee bank deposits and lending between financial
institutions.
By Jonathan Sibun
Last Updated: 6:38PM BST 10 Oct 2008
US stock markets suffer worst week on record
The Dow Jones fell 456.3 to 8122.2 leading to a 21pc fall over the week
after the index on Thursday suffered its biggest fall since Black Monday
in October 1987.
In one of the most volatile trading days in memory the Dow fell nearly
700 points after markets opened, breaking the 8,000 mark for the first
time since April 2003.
The drama continued as the index rallied into positive territory,
cheered on by traders on the floor of the New York Stock Exchange on
hopes that the market had reached its bottom.
Traders were left disappointed as shares fell again amid fears that
intervention by central banks to stabilise markets would be insufficient
to avert a deep and lengthy recession.
"Investors are just focusing on getting through the day," said Alan
Gayle, an investment strategist at Ridgeworth Investment in Virginia.
"The markets are being driven by emotion and rumor."
The S&P 500 fell 53.4 to 856.5, a weekly drop of more than 20pc. The
index has plunged in eight consecutive trading days, its longest losing
streak since 1996.
The stock market falls came despite attempts by US President George Bush
to restore confidence.
"The government is acting to resolve this crisis. We have a wide range
of tools at our disposal and we are using those tools aggressively," he
said. "We can solve this crisis and we will."
The stock market sell-off was broad based with banks, car makers and
retailers continuing to fall.
The Dow Jones and S&P 500 are down more than 40pc from their peaks a
year ago and are on course to record their worst yearly returns since
the Great Depression.
General Motors, which saw its share price drop 33pc on Thursday to its
lowest level since 1950, recovered some ground after it was forced to
assert that it was "not considering bankruptcy".
That came amid rising fears over the car maker's long term future after
ratings agency Standard & Poor's said GM, Ford and Chrysler could be
forced into bankruptcy in the face of slowing economies, dwindling car
sales and debt borrowing costs at record highs.
Wall Street bank Morgan Stanley also came under pressure, trading down
25pc, despite claims by chief executive John Mack that the bank was not
in trouble.
Mr Mack sought to quash speculation that the bank would have to raise
fresh capital to strengthen its balance sheet. Moody's, the ratings
agency, had earlier warned that it might cut Morgan Stanley's credit
rating on concerns over future earnings.
Concerns that the credit crisis is hitting spending on the high street
escalated after department store Macy's said profits would fall more
than it had forecasted.
The company's share price fell 10pc as it became the latest US retailer
to warn of dire economic conditions and plummeting September sales.