The decline in the market that started Thursday morning in Europe and accelerated in New York hit the Asian markets hard in early trading Friday.
Tokyo was down 3.30 percent at noon, reaching a six-week low, while markets in Hong Kong and Sydney were trading down more than 3 percent, setting the stage for what was shaping up to be a difficult day across Asia. Other markets, including Taiwan and Shanghai, were all opening lower.
The declines came amid renewed anxiety about the availability of bank loans — and fears that the Federal Reserve in Washington may be unable to curb the credit slump.
In New York trading, the broad Standard & Poor’s 500-stock index dropped 2.2 percent, or 29.36 points, reaching its lowest close since September 2006. The index, which closed at 1,304.34, is off more than 16 percent from its peak last fall.
Shares of financial services firms led the sell-off, which spread to every major sector of the market. Investors were unnerved by high-profile loan defaults at Carlyle Capital, an investment firm based in Guernsey, Channel Islands, that handles $21.7 billion in assets.
It was a double-barreled bit of bad news. The assets of Carlyle have lost value in recent months, to the point where the firm cannot pay back some loans. And the fact that the banks called in the money in the first place suggests they are anxious about maintaining the size of their credit lines.That touched off fears among investors, who sent the Dow Jones industrial average down 214.60 points, or 1.75 percent, to 12,040.39. All but one of the Dow components declined.
The Nasdaq composite index fell 52.31 points, or 2.3 percent, to 2,220.50.
Yields on agency mortgage-backed securities rose to their highest level relative to Treasuries in 22 years.
Investors were also discouraged by strong inflationary signals from the commodity and currency markets. Crude oil settled at another record, $105.47 a barrel, up 95 cents, or 0.9 percent. The euro hit another record against the dollar at $1.5370, before falling back to $1.5365, after European central banks chose to hold interest rates steady.
The yields on 10-year Treasury notes, which move in the opposite direction from the price, fell as investors rushed into government bonds. The price rose 23/32, to 99 10/32. The yield declined to 3.58 percent, from 3.67 percent.
The credit market troubles arrived on the day of a report that home foreclosures reached a record in 2007. The percentage of loans past due or in foreclosure jumped to 7.9 percent at the end of last year. Before the third quarter, the rate had never risen above 7 percent since records began in 1979.
Investors may also be looking ahead to Friday’s employment report from the Labor Department, considered the most important indicator of the nation’s economic health. Economists have predicted that payrolls rose by 25,000 jobs in February.
“Anything that is less than on target could throw Wall Street over the edge,” said Sam Stovall, chief investment strategist at Standard & Poor’s.
The 2.2 percent decline in the S.& P. 500 means that the index has lost $2.39 trillion in value in 103 trading days, according to Howard Silverblatt, an analyst of the index.
news source : http://www.nytimes.com/2008/03/07/business/worldbusiness/08stox-web.html?ref=worldbusiness
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