Thursday’s market saw stocks tumble, making it the fourth straight session to see losses. Experts say the weak outlooks for the U.S. and Europe coupled with weak data on China’s economic growth have made investors fear a recession will hit globally.
Waiting for the Fed
Large financial institutions such as banks took the largest hits in the wake of lowered debt ratings from Moody’s. Citigroup fell to $24.25, showing a more than 4% loss. Morgan Stanley followed in the trend, dropping over 6% to $12.99.
James Dailey of TEAM Asset Strategy Fund, said that the financial world was waiting for “aggressive action out of the Fed” after the data showed the U.S. economy in danger of a recession, but none came.
Since the Federal Reserve statement on Wednesday, which described stimulus measures but focuses mainly on the U.S.’s weak economic prospects, the market has been on a downward turn.
Fed announces QE
Investors are taking the pessimistic view of the U.S. economic to heart, and rising doubts about the ability of the euro zone to solve its debt crisis is serving to scare off growth even more.
The latest data shows a decrease in Americans who filed for unemployment benefits last week, but the figures were not enough to ease the fears that the world’s largest economy is close to falling back into recession.
The Federal Reserve announced its program to sell $400 billion in short term Treasury bonds and purchase the same amount in U.S. government debt to stave off these fears and heighten investor confidence amidst a shaky economy. The plans is a move to lower the cost of borrowing long-term and give the housing market a boost.
Investors, however, continue to focus on the “significant” economic risks that it stated the U.S. faces. Data also shows the second-largest global economy, China, has contracted for 3 months running, spurring investors to shy away the market and risk.