Stocks closed off their lows Thursday but still finished with widespread losses. Renewed worries about credit markets and data that failed to fuel rate cut hopes left the major indices looking overbought on a short-term basis, especially after averaging gains of more than 4.0% over the prior four sessions.
Weakness began overseas after a senior Japanese government official reignited worries that losses from U.S. subprime mortgages will spread. That sparked further unwinding in the yen carry trade and contributed to a 1.6% decline on Japan's Nikkei 225.
The major European bourses plunged 1.8% on average as the London interbank offered rate (Libor) climbed for a 10th straight session to 5.72%. That's the highest since the aftermath of the 9/11 terrorist attacks and now stands 47 basis points above the Fed Funds target, more than double the 21 basis-point average over the last five years and lending further evidence of the contagion effect from the U.S. subprime fallout that prompted Lehman to downgrade two European banks (e.g. CS -1.8%, DB -2.1%).
The Wall Street Journal reporting that Citigroup (C 45.99 -1.22) may be vulnerable to SIV losses, since it owns about 25% of the market, also left valuations of financial stocks susceptible to further interpretation. A 2.6% decline in the Dow component, which also ranks among the five most influential names on the S&P 500, is partly why the broader market turned in the worst performance among the majors. The heavily weighted Financial sector tumbled 1.3% right out of the gate, which removed a significant source of market support, and closed down 2.1% to pace all 10 sectors finishing lower.
Not even Technology (-0.9%) was able to shrug off
Now only thing people have on their mind is will this fall effect Forex Market i.e currency
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