Stock markets and oil prices fell on Thursday after bleak economic data and a dim outlook from the world's largest retailer heightened fears of a prolonged global recession.
The US dollar weakened while bonds and gold rose after Wal-Mart Stores Inc indicated that US consumer spending, which accounts for about two-thirds of the activity in the world's largest economy, continues to falter amid mounting unemployment and dwindling savings.
Shares in Wal-Mart slid 9% earlier after it cut its profit forecast for its fourth quarter and said sales were weaker than Wall Street estimates.
The Dow Jones industrial average was down 27.24 points, or 0.31%, to 8,742.46 on Thursday. The Standard & Poor's 500 Index was up 3.08 points, or 0.34%, to 909.73. The Nasdaq Composite Index gained 17.95 points, or 1.12%, to 1,617.01.
US President-elect Barack Obama made another pitch for a massive economic stimulus plan, though there was some nervousness among investors as few new details were added.
The pound rose to a three-week high against the dollar after the Bank of England cut its benchmark interest rate less aggressively than some had expected.
The central bank cut the rate to a record low of 1.5% to prevent the credit squeeze from further slowing the economy.
British interest rates have now fallen by 3.5 percentage points since October and some analysts believe the central bank will soon follow the US Federal Reserve and The Bank of Japan in bringing borrowing costs close to zero.
Britain's benchmark index ended down 0.1%, following the expected rate cut, which kept investors cautious. The FTSE 100 closed at 4505.37 points, down 2.14 points.
European shares also fell, led lower by banks and miners, as a flurry of gloomy economic data raised worries about a deep global recession and weak sales by the world's top retailer Wal-Mart hurt sentiment.
The FTSEurofirst 300 index of top European shares ended down 0.7% at 870.92 points.
Oil continues to slide
Oil prices fell another 2.2% on Thursday, following a 12% drop the previous day, the biggest daily percentage decline in the price of crude oil in more than seven years.
US crude for February delivery fell 93 cents to settle at $US41.70 a barrel, while London Brent crude fell 97 cents to $US44.89 a barrel.
Oil prices have dropped more than $100 a barrel since July as a global financial crisis has cut consumer and business energy demand, threatening to shrink total world oil usage for the first time in 25 years.