People, I’m really starting to get worried here.

Stocks Fall on Inflation Fears

NEW YORK, Feb. 29 — U.S. stocks took a dive Friday on worries about inflation and the sputtering economy, with the Dow Jones industrial average plunging 2.5 percent in the afternoon, or 315 points, to close at 12,266. .

Leading the Dow lower was American International Group, one of the country’s leading insurers. It’s stock fell 7 percent after reporting a $5.3 billion quarterly loss as it wrote down $11.1 billion on credit derivatives linked to subprime mortgages.

The S & P 500 index fell 2.7 percent, or 37.05 points, to close at 1,330.

Traders were also nervous about the rising price of oil and its effect on inflation. The cost of a barrel of oil went over $103 early in the day but moderated later. In addition, a monthly survey by Chicago purchasing managers showed a weaker business market than anticipated in that area, according to the Associated Press.

By MADLEN READ
The Associated Press

NEW YORK - A jubilant Wall Street barreled higher Tuesday after the Federal Reserve cut its benchmark interest rate by a larger-than-expected half percentage point. The Dow Jones industrial average reacted by surging 335 points - its biggest one-day point jump in nearly five years.

Although some investors hoped for a rate cut of that magnitude, most were betting on a smaller, quarter-point cut in the federal funds rate. The Fed responded to the spilling of credit market problems into the rest of the economy by saying, “the tightening of credit conditions has the potential to intensify the housing (market) correction and to restrain economic growth more generally.”

The Fed lowered the benchmark fed funds rate to 4.75 percent after keeping it unchanged for more than a year and not lowering the rate since 2003. It also reduced the discount rate - what it charges banks borrowing from its discount window - by a half percentage point to 5.25 percent. On Aug. 17, the central bank lowered the discount rate by a half-point to help keep cash moving in the U.S. banking system.

The central bank’s decision and the wording of its accompanying economic assessment gratified a market that plunged during August amid fears that credit market tightness, spawned by a continuum of mortgage defaults and delinquencies, would send the economy toward recession.

read more HERE

from The Center for American Progress

By Richard Beales in New York, Krishna Guha in Washington and Chris Giles in London
from The Financial Times

US equities staged a late recovery on Thursday after the London stock market tumbled more than 4 per cent, its biggest one-day fall since March 2003, as a flight from risky assets fueled further market turmoil around the world.

The FTSE index closed 250.4 points lower at 5,858.9, falling below the 6,000 level and hitting its lowest levels since September 2006. Financial and mining stocks suffered most.

There was some relief later when US stocks rebounded from steep early losses to close mixed. The S&P 500 index ended 0.3 per cent higher, powered by a late rally in financial stocks.

Michael Mayo, Deutsche Bank analyst, said that US bank and brokerage stocks rose on speculation that the Federal Reserve would cut interest rates in response to credit market turmoil.

The sell-off prompted the Treasury, in its first comments since the crisis began, to try to reassure investors and the public that the underlying UK and world economies remained sound.

“There will always be periods of uncertainty in the markets but the long-term decisions the government has taken - giving independence to the Bank of England, the fiscal rules and low and stable borrowing - have created a strong platform of economic stability,” it said.

The falls in London came as European indices suffered triple-digit falls, with France’s CAC 40 index down 3.3 per cent and Germany’s DAX down 2.4 per cent. Asian stock markets posted sharp declines. Tokyo’s Nikkei 225 index fell 2 per cent, while the Korean Kospi fell nearly 7 per cent.

read more HERE