Stocks drop again as fears of recession mounts
February 29, 2008
The Stocks slumped again on the 28th of February as the worries of a coming recession mounted to higher levels. The stocks took a drop on Thursday after the remarks made by the Federal Reserve chairman Ben Bernanke on the banking division enhanced the fears of a recession. Another reason for the drop was the feeble reports that came in on Thursday about the nation’s economic growth and the employment market. His remarks together with the weak reports that came in was enough to scare away the Wall Streeters who were looking for some sign of financial recovery.
The Dow Jones industrial average fell by 0.9 percent. The Standard and Poor’s 500 index also took a fall of 0.9 percent at the end of the day. The day also saw the tech heavy NASDAQ Composite as well taking a fall of 0.9 percent. After the trading closed at the end of the day Dell announced a quarterly profit as a result of the numerous charges it had taken in the quarter. The profit that it has reported is however lesser than what it was in the previous year. This resulted in the shares falling in the extended hours of trading.
AIG, Dow Stock, announced that the group has taken an $11 billion write-down and also declared a huge $5.3 billion loss in the quarter. The reason the company gave for the heavy loss in the quarter is because of the fall-outs the company had to suffer in the investments the company had made in the home loans. The shares of AIG fell during the extended hours of trading after this announcement came in.
Once the trade closed the Gap company said that its quarterly incomes had met with the forecasts. They also said that the board of the company had approved a $1 billion shares buy back plan. This announcement resulted in the shares of the company taking a jump by almost 5 percent during the after-hours trading.
The last day of February is going to be very crucial as the reports on the personal spending and earning would come out on the 29th. The inflation factor of the report would also be very important. The fact that all this comes before the start of trade makes them all the more important. Another report that is scheduled to come in on 29th is one on the manufacturing sector in the Midwest. A report on the consumer sentiment is also due on the 29th. The last two reports are listed to come in shortly after the trade has commenced.
The treasury prices went for a roll on the 28th and resulted in the yields going down even lower. This prompted the investors to take up the safety of a government debt. During the day the oil prices went above a record trading high of $102 per barrel. The gold price was also at a very high level. To make things worse the dollar once again took a record low against the Euro. It also took a fall in front of the Yen.