Wall Street remains on lows as bad economic news swells
(11am update) Stocks on Wall Street bounced off the lows set on Tuesday but later closed near the bottom as falls outnumbered rises by two to one.
Bad news dominated as the Federal Reserve cut its forecast for the economy this year while government reports showed industrial production shrank more than forecast and housing starts slid to a record low.
The Obama administration’s $US75 billion programme for "at risk" homeowners aimed at slowing mortgagee sales failed to allay fears of more writedowns among financial stocks.
United Technologies and Caterpillar retreated as the Fed predicted the economy will contract as much as 1.3% this year. Wells Fargo, Bank of America and Citigroup all slid at least 4.6%.
The main Dow Jones index closed 3.03 points up, or less than 0.1%, at 7555.63. The broader S&P500 also moved less than 0.1% to stay under the 800 mark at 788.42.
Canadian stocks fell, sending the benchmark to its lowest in two months. The S&P/TSX Composite Index closed 2.4% down at 8175.95.
European stocks fell for a third day on poor corporate results. Millennium & Copthorne Hotels slid the most in 13 years after halving its dividend and reporting lower earnings.
The Dow Jones Stoxx 600 Index decreased 0.3% to 183.35. It has fallen 50% since the beginning of last year.
National benchmark indexes dropped in 13 of 18 western European markets.
The UK benchmark FTSE 100 dropped 27.3 points, or 0.7%, to a three-month low 4006.83.
Germany’s benchmark DAX dropped 3.4% to 4216.6, on concern banks may face downgrades. Deutsche Bank and Commerzbank both dropped at least 5%. Luxury carmaker Daimler fell to the lowest in two weeks.
France’s CAC 40 was steady, shedding a mere 1.16 points, or less than 0.1%, to 2874.07,
Commodities: Oil down, gold up
Crude oil for April delivery fell on speculation that a government report will show US supplies climbed for the 19th time in 21 weeks as the recession cuts demand.
Prices for April delivery fell 71c, or 1.8%, to $US37.83 a barrel in New York. Oil for March delivery declined 1c to $US34.92. The March contract expires tomorrow (Feb 20).
Gold rose for a second straight day on speculation the recession will deepen, boosting the appeal of the precious metal as a haven asset. Silver also gained.
Futures for April delivery climbed $US2.10, or 0.2%, to $US969.60 an ounce in New York.
Currencies: Dollar, yen down
The dollar rose above ¥93 for the first time in six weeks and strengthened to the highest against the euro since November.
The yen fell the first time in three days versus the euro.
The dollar rose 1.3% to ¥93.78 after touching ¥93.71, the highest level since January 7. The dollar advanced 0.4% to $US1.2535 per euro, after touching $US1.2522, the strongest level since November 21. The yen gained 1.1% to ¥117.58 per euro.
The Canadian loonie gained for the first time in three days as the US mortgage package boosted demand for riskier assets. It rose 0.4% to $C1.2601 per US dollar.