Source : The Straits Times, Jan 17, 2008
NEW YORK - US stocks endured fresh losses on Wednesday after a Federal Reserve report said economic growth had slowed and fresh data shone a spotlight on simmering inflationary pressures.
The reports fuelled fears the world's largest economy could be entering a potential recession.
In volatile trade, the blue chip Dow Jones Industrial Average closed down 34.95 points (0.28 per cent) at 12,466.16, after diving by over two per cent a day earlier.
The tech-laden Nasdaq composite lost a heftier 23.00 points (0.95 per cent) to 2,394.59 and the broad-market Standard & Poor's 500 index finished 7.75 points (0.56 per cent) lower at 1,373.20.
The Dow is down around six per cent for the year so far, while the Nasdaq has shed almost 10 per cent.
Stocks tumbled after the Federal Reserve's Beige Book survey said that US economic momentum had moderated during the end of 2007, in part due to 'subdued' retail sales.
'Reports from the 12 Federal Reserve districts suggest that economic activity increased modestly during the survey period of mid-November through December, but at a slower pace compared with the previous survey period,' the report said.
A separate government snapshot added to Wall Street's downbeat sentiment by revealing that US consumer prices rose a slightly stronger-than-expected 0.3 per cent in December, stoking inflation for the year to a 17-year high of 4.1 per cent.
'Headline inflation rates remain well in excess of desired comfort levels and there is no sign of that ending anytime soon,' observed Mr Stephen Gallagher, an economist with Societe Generale.
Investors are worried that a jump in inflationary pressures could deter the Federal Reserve from cutting interest rates. The Fed is widely expected to cut borrowing costs at a policy meeting later this month to help underpin economic momentum. -- AFP
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