Selling resumed at Wall Street on Thursday, 18 August 2011 and US stocks plunged on fears that another recession might be engulfing the US economy soon. Sharp losses abroad and some pessimistic data at Wall Street pushed US stocks substantially lower on Thursday. The day at Wall Street was heavy in terms of economic data. Worse than expected economic data in most cases exacerbated weakness in the market as investors feared that US will once again enter into another recession and the global economic recovery will be doomed. Overall pessimism helped gold extend its climb to mark another new record. The dollar strengthened considerably.
For the day, that ended on Thursday, 18 August 2011, Dow ended lower by 419.63 points (3.7%) at 10,990.6. Nasdaq ended lower by 131.05 points (5.2%) at 2,380.43. S&P 500 ended lower by 53.23 points (4.5%) at 1,140.65. Dow was trading lower by almost 528 points earlier during the day.
All ten economic sectors ended lower materials, energy, industrial and technology sectors. Twenty-nine out of thirty Dow components ended lower led by Alcoa, Bank of America and H-P, each slipping by almost 6%.
Europe's bourses dropped precipitously this morning as traders there reacted to news that an unnamed financial institution borrowed some $500 million from the European Central Bank. U.S. economic reports did not help in allaying concerns.
Morgan Stanley reduced its forecast for global growth, calling Europe's policy answer to its sovereign-debt crisis insufficient
Weakness was only exacerbated by data. Ahead of the open, weekly initial jobless claims increased slightly more than expected to 408,000, overall CPI increased at a sharper than expected clip of 0.5% for July, but core CPI for July increased by an in-line 0.2%. Once the session was underway, stocks were knocked another leg lower by news that the Philly Fed Survey unexpectedly sank to -30.7 in August from 3.2 in July, the lowest reading since March 2009. Existing home sales also slowed more than expected to an annualized rate of 4.67 million. Leading indicators provided a positive surprise with a 0.5% increase, however. The macroeconomic data points of the day added to the uglier outlook for the U.S. economy, giving more fodder to talks of a recession.
Hewlett-Packard shares lost 6% after the computer maker cut its full-year sales forecast in an early release of its earnings statement, originally expected for after the bell. After the close of trading, it said it planned to buy British software firm Autonomy Corp.
Precious metals shot up once again on Thursday, 18 August 2011 at Comex. Prices rose as investors flocked to bullions as a safe haven for investment as global recession fears resumed. Gold for December delivery rose $28.2 or 1.6%, to end at $1,822 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. During intra day trading, prices rose to a high of $1,829.7. It was all time new record for the yellow metal. On Thursday, silver prices for September delivery rose by $0.34 (0.8%) to end at $40.69.
Crude prices plunged on Thursday, 18 August 2011 at Nymex. Prices dropped substantially on that day as global recession fears resumed. On Thursday, crude oil futures for light sweet crude for September delivery closed lower by $5.2 (5.9%) at $82.38/barrel. Prices fell to a low of $81.86 during intra day trading.
In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by almost 0.6%. The dollar was modestly higher versus the Japanese yen and Swiss franc.
New York Stock Exchange composite volume was 6.31 billion, rebounding from the prior session's low levels.
Indian ADRs ended substantially lower on Thursday. Infosys led the group shedding 11.5%. ICICI Bank, Tata Motors, Wipro Technologies and HDFC Bank shed 8.6%, 6.9%, 8.3% and 4.5% respectively.
Tomorrow, there is no economic data scheduled for the day. But earning reports will continue to pour in.