Stocks drop on economic concerns despite bailout

NEW YORK - Wall Street ended its worst week in seven years with another tumble on Friday on fears that the US$700 billion financial rescue package may not unblock credit markets and stave off a US recession.

After much legislative haggling that roiled and captivated global markets for the past two weeks, the US House of Representatives passed the bill on its second try and President George W. Bush signed it into law.

Financial stocks, which had traded sharply higher on the expectation the bill would be passed, fell after the House vote. Traders cited profit-taking and said the market was now focusing on the tough economic road still ahead and on how the bill will be implemented.

The S&P financial index fell 3.9 per cent, while the three major indexes all fell more than 1 per cent.

The monthly jobs report earlier in the day suggested the economy may be in a recession. US employers cut 159,000 jobs in September, the ninth straight monthly reduction and the steepest decline in five and a half years.

The Dow Jones industrial average fell 157.15 points, or 1.50 per cent, to 10,325.70, while the Standard & Poor's 500 Index slid 15.04 points, or 1.35 per cent, to 1,099.24. It was the first time the S&P closed below 1,100 in almost four years.

Source: Singapore Business Times - 04 Oct 2008