This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7184429.stm
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
Version 0 | Version 1 |
---|---|
US stocks slump on economy fears | US stocks slump on economy fears |
(about 1 hour later) | |
The Dow Jones Industrial Average slumped nearly 250 points amid fears that the US could enter a recession, as consumers reduce their spending. | |
The benchmark index shed 246.79 points, or 1.91%, to end at 12,606.30 while the Nasdaq declined 1.95%. | |
A warning by American Express a day earlier, that spending was slowing and defaults would rise, fuelled jitters. | A warning by American Express a day earlier, that spending was slowing and defaults would rise, fuelled jitters. |
Investors are worried that major banks are yet to reveal the full impact of their exposure to the housing slowdown. | Investors are worried that major banks are yet to reveal the full impact of their exposure to the housing slowdown. |
The financials are going to continue to be a problem Michael Church Church Capital Management. | |
A report in the New York Times on Friday said leading investment bank Merrill Lynch could see as much as $15bn in losses, stemming from its exposure to the sub-prime crisis. | |
"The financials are going to continue to be a problem," said Michael Church, portfolio manager at Church Capital Management. | "The financials are going to continue to be a problem," said Michael Church, portfolio manager at Church Capital Management. |
Nerves surrounding the financial sector are increasing, ahead of imminent earnings statements from major banks. | |
Analysts say there is still much uncertainty about the extent to which banks will have to write off mortgage related loans. | |
Amex fell more than 10% on Friday, while Countrywide Financial plunged 18%. | |
Earlier in the day US banking giant Bank of America, said it would buy Countrywide Financial, the country's biggest mortgage lender, in a $4bn (£2.04bn) deal. | |
Countrywide was a key player in the sub-prime market, which targets those with limited credit records or unpredictable incomes. | |
During the housing boom, many people took out mortgages while borrowing costs were lower. | |
However, as US interest rates have risen over the past two years, many borrowers have defaulted on payments they can no longer afford. | |
Wider impact | |
But fears about an economic slowdown are now being seen far beyond finance firms. | |
On Thursday, Federal Reserve head Ben Bernanke said that the outlook for the US economy in 2008 had worsened. | |
Tiffany issued a profit warning on Friday, echoing fears that consumer spending would cool, and highlighting worries that even high-end spenders were tightening their belts. | |
The upmarket jewellery firm saw its shares end 11.2% down, while at the other end of the spectrum fast food firm McDonald's shed 6.6%. | |
As well as the Dow Jones Industrial Average, the Standard & Poor's 500 slumped 1.36%. | |
For the week, the Dow fell 1.5%, the Standard & Poor's 500 declined 0.8% and the Nasdaq dropped 2.6%. | |
During the same period the FTSE 100 dropped 2.1%, while both the benchmark indexes in France and Germany were more than 1% lower for the week. |
Previous version
1
Next version