Friday, January 30, 2009

Wall Street tumbles on economy worries

Wall Street tumbled on Thursday as a series of economic data and earnings reports suggested that the economic conditions were deteriorating.

The US Labor Department reported that the number of continuing unemployment benefit claims increased by 159,000 to 4.78 million during the week ending January 17, the highest on records since 1967 and much worse than economists' expectation of 4.65 million.

Meanwhile, the number of initial jobless benefit claims in the week ending January 24 was only 1,000 lower than the 26-year high of 589,000 reached in late December.

The US Commerce Department said on Thursday that new orders for durable goods dropped by 2.6 per cent last month, worse than the 2 per cent decline economists expected.

A separate report from the Commerce Department showed that new home sales fell 14.7 per cent in December to a seasonally adjusted annual rate of 331,000, from a downwardly revised November figure of 388,000. It was the lowest on records dating back to 1963.

Earnings reports added to the recession worries. Ford Motor posted a fourth-quarter loss of $5.9 billion. Ford announced its decision to cut about 20 per cent of the workforce in its credit unit, which means 1,200 jobs.

Shares of financial companies declined sharply after Wednesday' s rally on "bad bank" proposal.

The Dow Jones industrial average fell 226.44 points, or 2.70 per cent, to 8,147.97. The Standard & Poor's 500 Index lost 28.95 points, or 3.31 per cent, to 845.14. The Nasdaq Composite Index slid 50.50 points, or 3.24 per cent, to 1,507.84.

The US Labor Department reported that the number of continuing unemployment benefit claims increased by 159,000 to 4.78 million during the week ending January 17, the highest on records since 1967 and much worse than economists' expectation of 4.65 million.

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