Global economic woes weigh on Wall Street

Dow Jones: 10,990.58 (–419.63) Nasdaq: 2,380.43 (–131.05) SP 500: 1,140.65 (–53.24)

US STOCKS tumbled yesterday, sending the Dow Jones Industrial Average down more than 400 points for the fourth time this month, on concern the global economy is slowing and speculation that European banks lack enough capital.

The Standard and Poor’s 500 slumped 4.5 per cent to 1,140.65 in New York. All 10 groups in the SP 500 dropped at least 1.2 per cent, and only 10 stocks in the benchmark gauge advanced.

Treasuries rallied, pushing 10-year yields to a record low.

“It’s almost like a worldwide buyers strike,” said Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston.

“There’s a general malaise on global economic activity. People continue to downgrade their expectations on growth. There’s concern about funding problems. That’s making us very nervous and we want to take risk out of portfolios at least for the immediate future,” he said.

More than $3.2 trillion was erased from US equity values between April 29th and August 8th, leaving the SP 500 within 29 points of entering a bear market.

Caterpillar, the world’s largest construction and mining-equipment maker, slumped 4.9 per cent to $83.33.

FedEx, operator of the world’s biggest cargo airline, sank 5.9 per cent to $74.46.

Pulte, the largest US home builder by revenue, decreased 11 per cent to $4.16.

American banks tumbled following losses in European financial shares.

Bank of America, the largest US lender by assets, sank 6 per cent to $7.01.

Citigroup sank 6.3 per cent to $27.98.

Banks also slumped after the Wall Street Journal reported that American regulators are intensifying scrutiny of the US arms of Europe’s largest banks amid concern about the region’s debt crisis.

Hewlett-Packard dropped 6 per cent to $29.51 after jumping as much as 8.3 per cent earlier.

Gold surged to a record as investors fled stocks for the perceived safety of the metal.

Alcoa, the largest US aluminum producer, decreased 6 per cent to $11.52.

Exxon Mobil fell 4.3 per cent to $70.94. – (Bloomberg)