August 18, 2009
Wall Street plunged on Monday amid global sell-off, as investors around the world feared the recent rally of equities had outpaced the prospects for economic growth.
Stocks on overseas markets extended the heavy selling that began on Wall Street Friday, triggered by a weaker than expected reading on consumer confidence.
The Shanghai composite index fell 5.8 percent, the worst one-day drop since November, while the Japanese Nikkei stock average declined 3.1 percent due to a weaker-than-expected GDP growth for the second quarter.
After months of hoping for an economic recovery, investors now worry about sluggish consumer spending, which accounts for two thirds of the U.S. economy's growth.
The market took a hit last week by a sharp drop in the Reuters/University of Michigan consumer sentiment index, which followed a surprisingly weak July retail sales report from the U.S. Department of Commerce.
Meanwhile, oil prices dipped below 66 U.S. dollars a barrel on the New York Mercantile Exchange Monday.
Lowe's Cos., the second largest U.S. home improvement retailer, fell more than 10 percent on Monday after releasing its quarterly report. The company said poor weather and cautious consumer spending had caused sales to fall 19 percent in the second quarter, missing analysts' forecasts.
The Dow Jones average fell 186.06, or 2 percent, to 9,135.34. The S&P 500 index fell 24.36, or 2.4 percent, to 979.73, while the Nasdaq fell 54.68, or 2.8 percent, to 1,930.84.