U.S. stocks slid, capping the worst week for the Standard & Poor's 500 Index since the 2001 terrorist attacks, on concern the $700 billion bank bailout isn't enough to unlock credit markets and prevent a recession...
The S&P 500 declined 15.05 points, or 1.4 percent, to 1,099.23. The Dow Jones Industrial Average lost 157.47 points, or 1.5 percent, to 10,325.38. The Nasdaq Composite Index slipped 29.33, or 1.5 percent, to 1,947.39. More than three stocks decreased for each that rose on the New York Stock Exchange.
There are good reasons for investors to fear a recession, not least the continuing deterioration in nonfarm payrolls. From Bloomberg:
The U.S. lost the most jobs in five years in September and earnings rose less than forecast as the credit crisis deepened the economic slowdown.
Payrolls fell by 159,000, more than anticipated, after a 73,000 decline in August, the Labor Department said today in Washington. The jobless rate, the last one reported before the presidential election, remained at 6.1 percent. Hours worked reached the lowest level since records began in 1964.
Fortunately, the services sector kept its head above water in September. Bloomberg reports:
The Institute for Supply Management's index of non-manufacturing businesses, which make up almost 90 percent of the economy, decreased to 50.2, higher than forecast, from 50.6 in August, the Tempe, Arizona-based group said today. A reading of 50 is the dividing line between growth and contraction.
Still, the prognosis for the US economy is not good. The ECRI's Weekly Leading Index edged up to 122.2 in the week to 26 September from 122.1 in the previous period but its annualized growth rate fell from minus 12.3 percent to minus 13.3 percent, the lowest since 25 February 1975. From Reuters:
"With WLI growth plunging to its lowest reading since the severe 1973-75 recession, the 2008 recession is set to get noticeably worse," said Lakshman Achuthan, managing director at ECRI.
And it's no better in Europe.
In the UK, the services sector contracted at the fastest rate for at least 12 years, the Chartered Institute of Purchasing and Supply/Markit purchasing managers' index for services companies falling to 46.0 in September from 49.2 in August.
It was little better in the euro area. Markit's eurozone services purchasing managers' index slipped to 48.4 in September from 48.5 in August. However, retail sales rose 0.3 percent in August, although that still left it 1.8 percent lower than a year earlier.