US market tumbles as correction fears mount

[alienlovechild 75]

Posted 46 minutes ago

After the best August in nine years, traders on the New York Stock Exchange are wondering whether the Dow Jones index has leapt too far ahead of the real US economy.

The plunge on Wall Street came despite the first positive economic news from the manufacturing sector in many months.

The decline was led by the banks, the same sector that drove the world into financial crisis almost one year ago.

Wall Street ignored the first good economic news from the US manufacturing sector in 19 months.

Mid-morning the Institute of Supply Management reported its highest manufacturing index since June 2007, to above 50 points. This indicates expansion in the sector and new orders jumped to their highest level since December 2004.

It was a sign, according to President Barack Obama who was not going to let the positive news go unremarked, that economic recovery is underway.

"For the first time in 18 months our manufacturing sector has expanded and it means these companies are starting to invest more and produce more and it is a sign that we're on the path to economic recovery," he said.

But many stock analysts fear that investors have been way too optimistic in factoring an economic recovery into share prices.

So while the administration is grabbing at any positive economic figure, the stock market is the opposite, turning its back on good news as traders grow nervous about a September sell off.

But a decline is no surprise to Bill Greiner of Scout Investment advisers.

He says there were only two rallies in the past century that were bigger than the one we've just been through. One came in 1932 and the other in 1933. Both ended in price plunges.

"If you look back in history, first of all over the past 100-year period of time, there's only been two six-month periods that have been stronger than the six months we just finished from March until the end of August," he said.

"Those last two didn't end particularly peacefully and I don't think this one will either."

With financial sector stocks driving today's sell-off, once again there are growing concerns more US banks are about to fail.

Eighty-four banks have failed already this year and today's Wall Street Journal reported the Federal Deposit Insurance Corporation (FDIC), which guarantees deposits, has 416 banks on its problem list. That is an increase of 109 troubled banks from three months earlier.

The newspaper also wrote in its editorial that the FDIC has a mere $10.5 billion in reserves to guarantee $4.5 trillion in bank deposits.

The paper says American taxpayers had better get ready for another bailout - this time for deposit insurance.

http://www.abc.net.au/news/stories/2009/09...ection=business

[thongd4me 69]

Continuing to print money to bail us out is a continuation of what got us in this mess in the first place.

The Chinese will not become American-style consumers helter-skelter in order to prop up our economy.

It's not in their interest and they don't owe us anything. We, on the other hand are like the 7 Dwarves on crack.

I owe, I owe, it's off to work we....are unemployed. B)

[dalegg 143]

Its hard to believe that just a year ago we were all oblivious to this.

[Heracles 417]

Continuing to print money to bail us out is a continuation of what got us in this mess in the first place.

The Chinese will not become American-style consumers helter-skelter in order to prop up our economy.

It's not in their interest and they don't owe us anything. We, on the other hand are like the 7 Dwarves on crack.

I owe, I owe, it's off to work we....are unemployed. B)

I don't agree with the bail either, however, this should not be confused with investing in America. Investing in America, as China and co are heavily investing in their country, is a must. For example, Amongst other projects, China is building a $50 billion dollar high speed rail network. Projects like these are what built America up post WWII.

I mean look at NYC, the city is in a severe need for an overhaul. We don't approve money for those projects, which in the long-term will generate returns and increase the standard of living. Instead we bailout business who will probably fail again anyway. Or implement the repub choice of doing nothing.

Regulation or higher consumption taxes is the only way we will fix the addiction to credit.

Edited September 2, 2009 by Booyah!

[Pinocchio Liberal 268]

Maybe this might learn ya !

[Pinocchio Liberal 268]

Listen! Heres the answer just need to hear IT!

Edited September 2, 2009 by ={Rogue}=

[Pinocchio Liberal 268]

I truly HOPE you folks are listening!

[Heracles 417]

I like that guy but his advice is good for individuals, not how to run the US.

Save + invest = return

Same goes for the government. However, sometimes they need to invest first in public/private ventures to get the ball rolling and then save the returns. Then use the savings to reinvest.

Encourage growth (growth as in investing in your country) = increased tax revenues = better services = better country

Repu growth is focused on consumer spending. Something I recall GWB pushed too. We hardly manufacture anything, therefore, that type of growth is pointless.

PS Maybe more Americans should pay attention to labels and buy American, rather than blindly picking up a product. Corporations were not the only ones to sell the country out. That is, sell their own prosperity out. After all, consumers have the final choice.

Edited September 2, 2009 by Booyah!

[rebeccajo 14]

Lemmings.

[mRx 16]

I like that guy but his advice is good for individuals, not how to run the US.

Save + invest = return

Same goes for the government. However, sometimes they need to invest first in public/private ventures to get the ball rolling and then save the returns. Then use the savings to reinvest.

Encourage growth (growth as in investing in your country) = increased tax revenues = better services = better country

Repu growth is focused on consumer spending. Something I recall GWB pushed too. We hardly manufacture anything, therefore, that type of growth is pointless.

PS Maybe more Americans should pay attention to labels and buy American, rather than blindly picking up a product. Corporations were not the only ones to sell the country out. That is, sell their own prosperity out. After all, consumers have the final choice.

Growth, in the government's eyes, is spending. 70% of GDP represents spending, and this is the figure that is supposed to represent our economic condition. It's totally faulty. I do agree with you that consumption is not what the economy needs. In times of uncertainty, it makes sense to save, not spend. Once savings are built up, capital formation commences. But with interest rates being manipulated by government, politically-favored companies being bailed out at the expense of healthy companies, and a continually declining currency, it's no wonder investment is flowing out of the US.

You need to dump that autarkic "Buy America" stance. Specialization, scaled economies, and comparative/absolute advantages have led to countries doing what they do best. Trade isn't something to be condemning, but cherishing.

The most autarkic countries are also the poorest, and this isn't a coincidence.

[Mr. Big Dog 10,747]

The DJIA went from roughly 6600 to 9600 in the span of 5 months - up 45%. Hell, my company has seen it's stock price shoot up more than 500% in that same time frame. Did anyone really expect this kind of rally to just keep going on seeing that economy is just now expected to come out of recession and seeing that this may well be a rather slow recovery or even a double dip?

Was It a Sucker's Rally?