New York, NY – Investors on Wall Street and around the world sold stocks with abandon Thursday, more convinced than ever that the United States and perhaps the globe are headed for a new recession.
Subscribe to our Daily Roundup Email
The Dow Jones industrial average fell as much as 527 points, the second consecutive rout in the stock market since the Federal Reserve announced a change in strategy for fighting the economic slowdown.
One financial indicator after another showed that investors are quickly losing hope that the economy can keep growing. The price of oil and metals, both of which depend on economic demand, fell sharply. Traders bought bonds for safety.
“Markets rely on confidence and certainty. Right now there is neither,” said John Canally, an economic strategist at LPL Financial, an investment firm in Boston.
Economic news was bad around the world. A closely watched survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies.
“The probability of going back into recession is higher now than at any point in the recovery,” said Tim Quinlan, an economist at Wells Fargo. He put his odds of a recession at 35 percent, the highest yet.
Christine Lagarde, the head of the International Monetary Fund, said the world economy was “entering a dangerous phase.” She told an annual meeting of the IMF and World Bank that nations need credible plans to get their debt under control.
By late afternoon, the Dow was at its low of the day. At 4:00 p.m. EDT, the average closed down 391 points, or 3.51 percent, at 10,733.83