23 Oct 2008

Wall St falls to 5-year low

10:12 am on 23 October 2008

Stocks in the United States fell to five year lows on Wednesday amid an increasingly dire outlook for the global economy.

Stock markets around the world have fallen sharply over the last two days and the credit crisis in the United States and Europe is now seen as beginning to hit developing countries.

The government of Argentina intends to seize almost $US30 billion of private pension funds and Hungary raised interest rates to defend its currency.

Falls in commodity prices sent energy and materials companies' shares sharply lower. Exxon Mobil was the top drag on the Dow, down almost 10 percent.

Shares in Boeing Co fell 7.5% after the aircraft maker reported a steep drop in quarterly profit and warned it might need to provide financing to some of its customers in 2009.

AT&T's shares fell 7.6% after posting a quarterly profit below Wall Street's forecasts.

In addition, Wachovia Corp, which is being bought by Wells Fargo & Co, posted a third-quarter loss of $US23.9 billion.

However, interbank borrowing costs fell again.

The Dow Jones industrial average fell 514.45 points, or 5.69%, to 8,519.21.

Standard & Poor's 500 Index slid 58.27 points, or 6.1%, to 896.78 - its lowest closing level since April 2003.

The Nasdaq Composite Index dropped 80.93 points, or 4.77%, to 1,615.75 - its lowest closing level since June 2003.

Trading volume was low on the New York Stock Exchange, with about 1.56 billion shares changing hands - below last year's estimated daily average of roughly 1.90 billion.

About 2.57 billion shares were traded on the Nasdaq - above last year's daily average of 2.17 billion.

European markets

European shares slumped again on Wednesday, led by bank and energy stocks.

The FTSEurofirst 300 index of top European shares ended down 5.5% at 873.30 points. The index has lost around 18% to date this month.

Banks were most affected: Spain's largest bank, Santander, fell 10.5% on concerns over Latin American economies. Spain's second-biggest bank, BBVA, was down 5.5%.

The Spanish stock index closed down 8.16% at 8,995.30 points.

In Paris, the CAC 40 fell 5.10% to 3,298.18 while in Frankfurt, the Dax fell 4.46% to 4,571.07.

In London, the FTSE 100 index shed 4.46% to close at 4,040.89. The index is down 37.4% for the year to date.

Markets in Asia fell sharply on Tuesday. In Japan, the Nikkei fell by almost 7%.