US stocks posted their steepest weekly drop since July 2002 after lower-than-estimated home construction, retail sales and manufacturing reinforced speculation that the economy is falling into a recession.
Intel Corp led technology companies to their fourth straight weekly decline after the world's biggest chipmaker forecast sales below analysts' expectations.
Shares of Citigroup Inc, the largest US bank by assets, plunged to the lowest level since February 1999 after reporting the biggest loss in its 196-year history.
Home construction fell 14 percent last month, concluding the worst year for the industry since 1980, the US Commerce Department said. Separate government reports showing retail sales fell for the first time since June and manufacturing in the Philadelphia region slid to a six-year low heightened concern that the housing slowdown is infecting the broader economy.
"It looks to me like we're already in a recession," said Jason Cooper, who helps manage about US$2.5 billion at 1st Source Investment Advisors in South Bend, Indiana. "There's nothing out there to say the worst is over."
The Standard & Poor's 500 Index declined 5.4 percent this week to 1,325.19, the lowest level since September 2006. The benchmark for US equities has tumbled 9.8 percent this year, its worst-ever start.
The Dow Jones Industrial Average dropped 4 percent to 12,099.30, extending its decline for this year to 8.8 percent. The NASDAQ Composite Index lost 4.1 percent to 2,340.02. The Russell 2000 Index, whose members have a median market value of US$504 million, dropped 4.5 percent to 673.18. The small-company index's 21 percent decline from its July record marks its first bear-market retreat since 2002. Two-year Treasuries yields sank to 2.35 percent, the lowest since May 2004.
US President George W. Bush's proposed economic stimulus package of up to US$150 billion and Federal Reserve Chairman Ben Bernanke's assurance that the central bank was ready to take "substantive additional action" on interest rates failed to allay investor concern that a weakening economy would hurt corporate earnings.
"You can see almost every member of our government talking about their concern for the economy and what they're trying to do to help, but that only makes it feel worse from the financial markets' point of view," said David Pearl, who helps oversee about US$6.7 billion as head of US equities at Epoch Investment Partners in New York.
More than 100 companies in the S&P 500 will report earnings next week, including Apple Inc, Bank of America Corp and Pfizer Inc. Analysts estimate that fourth-quarter profit for index members as a group fell 17 percent, Bloomberg data showed. That would be the biggest quarterly drop since 2001.
US stock markets will be closed tomorrow for the Martin Luther King Jr holiday.
The Treasury will auction US$21 billion of three-month bills and US$19 billion of six-month bills on Tuesday. Both were yielding 2.85 percent in when-issued trading. The Treasury will sell one-month bills on Wednesday.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
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