Jun 13, 2006

US, Global Markets Continue Tailspin

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Left: Pedestrians walk past the New York Stock Exchange; photo courtesy of Reuters/Peter Foley

(New York) US stocks fell today, with both the Nasdaq and the S&P down by more than 1 percent. Analysts pointed to investor fears about higher interest rates, inflation, and a global selloff in equities markets.

The glum traders on Wall Street, however, fared much better than investors around the globe in the past 24 hours. The Japanese Nikkei index plunged more than 4 percent, its biggest one-day loss in two years. In Bombay, Indian shares plummeted 4.5 percent to their lowest point this year.

The market's downward spiral comes as investors around the world nervously await US inflation data due out today and tomorrow.

"It is becoming more widely accepted that the Fed is likely to raise rates at its June meeting and that is being slowly priced into the market," said Charles Lieberman, chief investment officer of Advisors Capital Management. "The PPI [Producer Price Index] today did nothing to relieve investor concerns. It wasn't a truly troublesome number but it was not a helpful number, so we need more information, and the CPI is the next number to look at."

Government data on the core Producer Price Index for May showed costs rising somewhat higher than analysts on Wall Street predicted.

7 comments:

Anonymous said...

Economic recovery, my ass.

liberal_dem said...

It makes one wonder how different the Dow would have been today had we not invaded Iraq.

Brian said...

Raising rates is not the solution. Raising rates assumes that inflation is caused by an over-abundance of currency in the economy.

This inflation is caused by high fuel prices.

historymike said...

Anonymous:

We have been in a recovery, but in some areas of the country (like Michigan and Ohio) the recovery has brought little benefits.

It has been much more of a Sunbelt recovery, and a Rustbelt snoozer.

historymike said...

Liberal Dem:

The added federal debt (over $300 billion) from the war certainly has not helped the economy, as government borrowing drives up interest rates.

historymike said...

Agreed, Brian.

Fuel costs are the largest chunk of the current inflation spike.

The war planners assumed that there would be a few short-term price spikes during the invasion of Iraq, but that long-term price stability would be a benefit of regime change.

We're still waiting...

Hooda Thunkit said...

And, they're still taking us an a cleverly crafted "ride..."

(The kind of ride where the money falls out of your pockets...)

Sigh... :-(

One thing I know for sure is that thr Market will rise again, and fall, and rise...