5 Sep 2008

Wall Street tumbles on economy fears

8:54 am on 5 September 2008

Wall Street had its steepest fall in more than two months on Thursday, as more signs of weakness in the US labor market and increasingly sluggish growth overseas fueled a fierce sell-off.

The Dow Jones industrial average fell 345.30 points, or 2.99% to 11,187.58 and the Standard & Poor's 500 Index sank 38.15 points, or 2.99% to 1,236.83.

The Nasdaq Composite Index was down 74.69 points, or 3.20% , at 2,259.04.

It was the biggest one-day percentage drop for the three major indexes since 26 June.

Weekly government data showed an unexpected jump in the number of filings for jobless benefits, while a report by ADP Employer Services showed private employers cut 33,000 jobs in August.

The data fueled investor nervousness ahead of the government's key August non-farm payrolls report, and losses cascaded in afternoon trading.

Construction and mining equipment maker Terex Corp compounded the gloom when it cut its 2008 sales and profit forecast, citing weak demand in Western Europe and North America.

Financial stocks were also hammered, after Bill Gross, the manager of the world's biggest bond fund, Pimco, said that to halt what he called "a financial tsunami" the US government should give the Treasury the right to buy debt and other assets. Gross said he was staying on the sidelines of the markets.