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Stocks slide in jittery trading | |
(about 7 hours later) | |
Stocks fell in a jittery bout of trading on Thursday, on concerns about the US housing market and consumer spending after an uptick in inflation. | |
Investors were also uncertain if the worst of the credit crisis was over, with fears of more losses at big banks. | |
The Dow Jones industrial average fell 120.96 points, or 0.91%, to 13,110.05 after stocks in Europe and Asia fell. | |
Rising inflation, with high fuel prices a major factor, could make consumers cut back spending. | |
It could also prevent the Federal Reserve from lowering interest rates further in coming months to shore up the economy. | |
Housing market | |
Wells Fargo, the second-largest US mortgage lender, said that housing market downturn was far from over. | |
"We have not seen a nationwide decline in housing like this since the Great Depression," said Wells Fargo chief executive John Stumpf. | |
The Federal Reserve also pumped $47.25bn into US money markets to help ease tight liquidity. | |
This marked its biggest infusion of cash into the US banking system since just after the 11 September attacks. | |
To try to ease fears over available credit, several central banks have intervened by injecting money into the banking sector since August. | |
Global losses | Global losses |
Stock markets in Europe and Asia also chalked up losses. | Stock markets in Europe and Asia also chalked up losses. |
London's FTSE 100 index of leading shares ended the day down 1.13%, or 72.50 points, at 6359.60. | |
The Paris Cac 40 index slid 0.93%, while Frankfurt's Dax shed 1.49%. | |
It was a similar story in Asia, with Japan's Nikkei closing down 0.6% and Hong Kong's Hang Seng index ending the day 1.4% lower. | It was a similar story in Asia, with Japan's Nikkei closing down 0.6% and Hong Kong's Hang Seng index ending the day 1.4% lower. |
Concern about banks' financial exposure to investments backed by US mortgages that have gone bad has been causing extreme volatility on global markets in recent weeks. | Concern about banks' financial exposure to investments backed by US mortgages that have gone bad has been causing extreme volatility on global markets in recent weeks. |
Earlier on Thursday, UK bank Barclays unveiled a £1.3bn write-down for the July to October period on its exposure to credit market problems, although this was less than feared. | Earlier on Thursday, UK bank Barclays unveiled a £1.3bn write-down for the July to October period on its exposure to credit market problems, although this was less than feared. |
"There's just too much fear in the financials," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland, Ohio. | |
"The fear is back again that the write-downs are kind of a mystery and no one really knows what the bottom is or what the outcome is going to be." | |
HSBC, UBS, Bank of America, Morgan Stanley, Merrill Lynch and Citigroup have all suffered financial pain as a result of the sinking US mortgage market. | HSBC, UBS, Bank of America, Morgan Stanley, Merrill Lynch and Citigroup have all suffered financial pain as a result of the sinking US mortgage market. |
Inflation fears | |
US consumer prices rose in October as energy and food prices shot up, official data has shown. | |
Although in line with forecasts, the inflation data knocked US stock prices lower as investors worried about the strength of consumer spending. | |
The US Labor Department said its consumer price index rose 0.3% in October, while core prices, excluding food and energy costs, rose 0.2%. | |
A downbeat outlook from retailer JC Penney also raised fears that problems in the US housing market were taking their toll on shoppers. |
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