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New York - US stocks tumbled on Thursday, extending losses for a fourth straight session as the Federal Reserve’s weak outlook for the US economy and disappointing data from China heightened fears about a global recession.
Big banks were the top decliners, a day after Moody’s lowered debt ratings for large lenders.
Shares of Citigroup and Morgan Stanley hit a 52-week low at the market’s opening. Citigroup fell more than 4% to $24.25 and Morgan Stanley dipped more than 6% to $12.99.
The Select Sector Financial Sector SPDR funds was off more than 3%, also a 52-week low.
“A lot of people were hoping for the Fed to say we are close to recession but not really in it, and were expecting an aggressive action out of the Fed. The market didn’t get this,“ said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
The market’s mood has turned decidedly negative since the Fed statement on Wednesday, which detailed additional stimulus measures but also focused on the weak economy.
Investors are taking a more pessimistic view, and they question the ability of euro one governments to control the sovereign debt crisis and reverse sluggish growth.
The Dow Jones industrial average fell 355.86 points or 3.20%, Standard & Poor’s 500 Index was down 38.51 points or 3.30%, and the Nasdaq Composite Index was down 79.97 points or 3.15%.
In the latest economic data, Americans filed fewer new claims for jobless benefits last week, but the decline was not enough to dispel worries the economy was close to falling back into a recession.
The Fed announced a programme on Wednesday to sell $400bn of short-term Treasury bonds and buy the same amount of longer-term US government debt in a bid to lower long-term borrowing costs and bolster the housing market.
But investors were more focused on the Fed’s wording that there were “significant” risks to the economy. Elsewhere, data showed China’s manufacturing sector contracted for a third straight month in September.
The world’s second-biggest economy is vulnerable to fading demand from the United States and Europe, its biggest export markets.
Big banks were the top decliners, a day after Moody’s lowered debt ratings for large lenders.
Shares of Citigroup and Morgan Stanley hit a 52-week low at the market’s opening. Citigroup fell more than 4% to $24.25 and Morgan Stanley dipped more than 6% to $12.99.
The Select Sector Financial Sector SPDR funds was off more than 3%, also a 52-week low.
“A lot of people were hoping for the Fed to say we are close to recession but not really in it, and were expecting an aggressive action out of the Fed. The market didn’t get this,“ said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
The market’s mood has turned decidedly negative since the Fed statement on Wednesday, which detailed additional stimulus measures but also focused on the weak economy.
Investors are taking a more pessimistic view, and they question the ability of euro one governments to control the sovereign debt crisis and reverse sluggish growth.
The Dow Jones industrial average fell 355.86 points or 3.20%, Standard & Poor’s 500 Index was down 38.51 points or 3.30%, and the Nasdaq Composite Index was down 79.97 points or 3.15%.
In the latest economic data, Americans filed fewer new claims for jobless benefits last week, but the decline was not enough to dispel worries the economy was close to falling back into a recession.
The Fed announced a programme on Wednesday to sell $400bn of short-term Treasury bonds and buy the same amount of longer-term US government debt in a bid to lower long-term borrowing costs and bolster the housing market.
But investors were more focused on the Fed’s wording that there were “significant” risks to the economy. Elsewhere, data showed China’s manufacturing sector contracted for a third straight month in September.
The world’s second-biggest economy is vulnerable to fading demand from the United States and Europe, its biggest export markets.
