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By Jennifer Yousfi
Managing Editor
Markets headed lower today as any hope of an emergency rate cut from the U.S. Federal Reserve based on Friday's weak employment report began to fade.
"What's really moving the market are fears about a recession," Edward Hemmelgarn, president of Cleveland-based Shaker Investments Inc. with $350 million assets under management, told Bloomberg News. "People have stepped in and gotten burned so many times that they're getting fairly reluctant to put money to work. It's tough to find anything that's going up."
At noon ET today, the three major U.S. stock indices had all posted losses. The blue-chip Dow Jones Industrial Average Index had a decline of 59.26 points (-0.50%), to trade at 11,834.43. The tech-laden Nasdaq Composite Index slumped 18.12 points (-0.82%), to reach 2,194.37. And the broader Standard & Poor's 500 Index had a slip of 9.61 points (-0.74%), to settle at 1,283.76.
At midday, the Dow was 16.6% of its October 2007 peak, while the Nasdaq was down 23.3% [a decline of 20% signifies a bear market] and the S&P 500 was down 18.5%.
"Investors haven't made up their mind what the direction of the market should be today -there was the belief that the Fed might have an emergency cut – I think it's a ridiculous theory, because the Fed has already had 225 basis points in cuts, and they've got a meeting next week," Art Hogan, chief market strategist at Jefferies & Co. told MarketWatch.
The basic materials (-2.89%) and capital goods (-1.32%) sectors had the biggest declines. The only sector to post a gain at midday was the consumer non-cyclical sector, up a scant 0.18%.
Financial shares were particularly hard hit as Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and The Bear Stearns Cos. Inc. (BSC) all headed lower.
In overseas markets, Japan's Nikkei Index had a 250.67-point decline to reach a 2-and-a-half-year closing low of 12,532.13. Hong Kong's blue-chip Hang Seng Index increased 203.72 points to close at 22,705.05 fueled in part by a rise in Hong Kong-listed shares of HSBC Holdings PLC (HBC).
In Europe, major indices were down in late afternoon trading. The Paris-based CAC40, London's FTSE 100, Madrid's IBEX 35 and the Frankfurt-based DAX all posted declines.
At midday, the dollar had lost ground against the euro [down 0.117%], the yen [down 0.156%] and the pound sterling [down 0.139%].
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