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Special> Global Financial Crisis> Latest
UPDATED: March 3, 2009
Wall Street Plummets to Multi-year Low Amid Global Sell-off
Wall Street plummeted to a multi-year low on Monday with the Dow Jones average dropping almost 300 points to below 6,800 amid global sell-off

Wall Street plummeted to a multi-year low on Monday with the Dow Jones average dropping almost 300 points to below 6,800 amid global sell-off.

The Dow Jones average was down 299.64, or 4.24 percent, to 6,763.29, the lowest close since April 1997. S&P 500 lost 34.27, or 4.66 percent, to 700.82, the lowest since December 1996. The Nasdaq index declined 54.99, or 3.99 percent, to 1,322.85.


Traders work on the floor of the New York Stock Exchange March 2, 2009.(Xinhua/Reuters Photo)


The American International Group (AIG), the largest U.S. insurer, reported on Monday that it had lost 61.7 billion U.S. dollars, or 22.95 dollars per diluted share, in the fourth quarter. It is the biggest quarterly loss in U.S. corporate history.

On the same day, the U.S. government said it would provide the insurer with an additional aid of 30 billion dollars as part of a new government rescue bid.

To stave off collapse of the troubled insurance giant, the U.S. government had already pumped some 150 billion dollars into the company.

However, in an interview with CNBC on Monday, AIG CEO Edward Liddy said that the insurer is far more stable and secure than it was last fall but it's "difficult to say" if the company will need even more money from the government in the future.

"AIG is like a black hole in the U.S. financial system, absorbing billions of dollars of taxpayer money, but still fails to restore," said Benjamine Wey, a manager from a New York-based investment bank.

Fears about the financial woes increased last week after the U.S. government reached an equity conversion agreement with Citigroup.

Bank stocks were hammered on Monday as HSBC, the largest European bank, reported a 70-percent decline in net profit. HSBC also announced it is shuttering hundreds of branches in the United States that specialize in mortgage and consumer lending, and will cut 6,100 jobs in the states.

Shares of HSBC plunged 18.82 percent while Citi was down 20 percent at the closing.


The U.S. Commerce Department said consumer spending rose 0.6 percent in January, better than the 0.4 percent gain that economists had expected. However, the increase is expected to be fleeting given all the problems facing the economy.

Personal incomes rose 0.4 percent in January, partly reflecting the cost-of-living adjustments provided to millions of Social Security recipients. The personal savings rate surged to 5 percent, the highest level since 1995 as consumers continued to sock away more of their incomes amid the deepening recession.

The Commerce Department reported that overall construction spending dropped 3.3 percent in January, the fourth straight monthly decline.

"January construction spending dropped more than twice the consensus. December and November spendings were revised down hugely, by a total of 3.3 percent, so the net numbers were much worse than expected," said Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, an economic research group.

"The scope for further declines is huge, given the boom of recent years, and we expect nonresident construction to fall 40 percent from peak to trough," he added.

The U.S. factory sector weakened in February but the pace of decline eased, a survey by the Institute of Supply Management (ISM) showed.

The ISM said its manufacturing index edged up to 35.8 percent from 35.6 percent in January. It was the 13th month of decline and still far below the 50-percent level that separates expansion and contraction.

Merrill Lynch cut its 2009 global GDP growth forecast again on Monday in its latest research report.

"We have reviewed our forecast for global real GDP growth in light of the available data and revisited the case for a (shallow) economic recovery later this year and in 2010. The outcome is a further decline in the forecast from 0.1 percent to -0.4 percent in 2009 and from 3.4 percent to 3.1 percent in 2010," the report said.


Stocks plummeted around the world on Monday after billionaire investor Warren Buffett expressed his concern over economy.

In a letter to shareholders, Buffett said that he's certain the U.S. economy "will be in shambles throughout 2009" and "that conclusion does not tell us whether the stock market will rise or fall."

In Asia, Tokyo's Nikkei 225 stock average dropped 3.8 percent to 7,280.15, while Hong Kong's Hang Seng lost 3.9 percent. In Europe, stocks in Britain, France and Germany lost more than 3 percent respectively.

Crude prices plunged on Monday as investors lost confidence in the deteriorating global economy. Light, sweet crude for April delivery fell 4.61 dollars, or 10 percent, to settle at 40.15 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude fell 4.14 dollars, or about 9 percent, to 42.21 dollars on the ICE Futures exchange.

The dollar rose against a basket of major currencies, with the U.S. Dollar Index up 0.79 percent at 88.861.

(Xinhua News Agency March 3, 2009)

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