Fears over economy hit US stocks

Fears over economy hit US stocks

9 hours ago

Wall Street sank in volatile trading after the US government confirmed that the last quarter of 2007 did indeed see a sharp economic slowdown.

For the second straight session, the Dow Jones industrial average fell more than 100 points.

But the sense of panic that emanated from the near-collapse of Bear Stearns at the start of last week has lessened, observers say.

The Federal Reserve auctioned off 75 billion dollars in credit to investment banks, whose demand was solid but not at the desperate levels some investors had feared.

While investors appear less cautious than they were after the Fed helped orchestrate the sale of the Bear Stearns to JP Morgan Chase, there have recently been fresh signs of strain in the economy.

Still, some upbeat news gave investors some room for optimism. Investors appeared pleased by the Labour Department's report that the number of workers seeking unemployment benefits fell last week by a seasonally adjusted 9,000 to 366,000.

Though the weekly figures can be volatile, the reading was better than the 371,000 many economists predicted.

The Dow Jones industrial average fell 120.40, or 0.97%, to 12,302.46.

Broader stock indicators also fell. The Standard & Poor's 500 index declined 15.37, or 1.15%, to 1,325.76. The Nasdaq composite index fell 43.53, or 1.87%, to 2,280.83.

The Russell 2000 index of smaller companies fell 9.72, or 1.38%, to 692.39.