The stock market’s already-brutal start to the new year grew even worse today, driving some major indexes into bear-market territory, as fear of a recession triggered another barrage of selling.
The market fell steadily through the day after brokerage giant Merrill Lynch & Co. divulged a nearly $10-billion quarterly loss and a regional manufacturing report pointed to contraction in the sector.
Not even the endorsement of an economic stimulus plan by Federal Reserve chief Ben S. Bernanke could ease investor fears.
The Dow Jones industrial average sank 306.95 points, or 2.5%, to 12,159.21 — its lowest level since March. It is down 8.3% since the start of the year.
The Standard & Poor’s 500 index dived 39.95 points, or 2.9%, to 1,333.25 — its lowest close since October 2006. The index is off 9.2% this month.
The technology-heavy Nasdaq composite index fell a relatively restrained 2%.
Bernanke, testifying on Capitol Hill, again pledged that the Fed would cut short-term interest rates further, and said he supported proposals in Congress to buttress the economy with fiscal-stimulus measures. But his comments were overshadowed by the latest economic data.
Note that the move in the Value Line Index is by definition now a bear market (a decline of 20%). A few blog readers back in the fall would occasionally email and say–why are you posting about the economy, who cares, etc. etc. Never mind that it fits one of the purposes of the blog as it was originally founded. Now the economy is the number issue on the minds of voters in the current Presidential election. Hmmmm–KSH.
Update: There is more from AP here also.
“Never mind that it fits one of the purposes of the blog as it was originally founded”. Quite right too. Still, the nagging thought intrudes: does capitalism’s periodic failure to make the rich richer do anything other than to strengthen the timeliness of “the sure word” or “instruction in sound doctrine” of Titus 1:9?
All Is Well.®
And to think that we’d be facing stagflation after 6 years of budget-busting federal deficits!
Could it be the markets crashed after Benanke indicated a Keynesian (read: Democrat) approach to the economy? Telling a congressional committee what they wanted to hear in terms of ending the Bush tax cuts is a sure way to panic the markets and, if enacted, assure that we will get a few years of low economic growth, if not negative growth or stagflation.
I love it that you have posted all the economic news, Kendall. You posted a chart by Dr. Robert Shiller from Yale last April, that showed the dramatic rise in home prices in the preceding 8 years. It was an eye opener. Now the bubble has burst and we are seeing the consequences. I just wish Chairman Bernanke would go ahead and drop interest rates!