Perilous Times
Wall Street tumbles, spooked by shock US jobless, manufacturing data
Wall Street tumbled after disappointing US jobless data and a surprise
contraction in factory activity - a key guage of the economy -
heightened worries over the sustainability of the recovery.
Published: 4:01PM BST 19 Aug 2010
Wall Street tumbles, spooked by shock jobless, manufacturing data
The number of American filing for jobless benefits jumped unexpectedly
to the psychologically sensitive 500,000 level last week, the highest
in nine months.
The Dow Jones was trading down 1.5pc at 10255 at lunchtime in New York.
The broader S&P 500 and the technology rich Nasdaq both fell around
1.7pc.
European markets were also hit as the data reinforced fears about the
scale of the US economic slowdown and a possible fall back into
recession.
London's FTSE 100 index of leading British shares closed down 1.7pc to
5211, with Germany's DAX and the CAC-40 in France losing 1.8pc and 2pc
respectively.
"This double-dip prospect for the US keeps coming up so any signs of
concern here could again precipitate another wave of selling," said
Will Hedden, sales trader at IG Index.
Sentiment was knocked by figures showing the number of American filing
for jobless benefits jumped unexpectedly to the psychologically
sensitive 500,000 level last week, the highest in nine months.
Economists had expected 475,000.
The Federal Reserve Bank of Philadelphia’s general economic index fell
to minus 7.7 from 5.1 in July, the lowest level since August 2009.
Readings above zero signal growth in the regional gauge, which covers
eastern Pennsylvania, southern New Jersey and Delaware.
Ira Jersey, Interest rate strategist at Credit Suisse in New York,
said: "The Philly Fed report is concerning because it had been showing
the economy was doing okay. But now it is showing the new orders and
employment components are in negative territory.
"That's bad news for the economy and good news for the Treasuries
market."
Double-dip deflation fears helped push the price of the 30-year US
Treasury up a point and the yield down to 3.65pc.