U.S., Europe Stocks Fall, Commodities Drop on Recession Concern

[Joanne98]

June 22 (Bloomberg) -- U.S. and European stocks tumbled, extending losses from the first weekly decline for global equities in more than a month, as the World Bank said the recession will be deeper than previously forecast. Treasuries rose, while oil fell below $67 a barrel and metals slumped.

Freeport-McMoRan Copper & Gold Inc., Alcoa Inc. and BP Plc lost more than 3.8 percent amid a 2 percent retreat in the Reuters/Jefferies CRB Index of 19 raw materials. Bank of America Corp., the biggest U.S. bank by assets, dropped 6.1 percent as two board members resigned. Walgreen Co., the second-largest U.S. drugstore chain, declined 5.6 percent after reporting earnings that trailed analysts’ estimates.

The Standard & Poor’s 500 Index slid 2.6 percent to 897.36 at 2:19 p.m. in New York following last week’s 2.6 percent slump. The Dow Jones Industrial Average sank 166.19 points, or 2 percent, to 8,373.54. Europe’s Dow Jones Stoxx 600 fell 2.8 percent and the MSCI World Index decreased 2.4 percent. Ten stocks fell for each rising on the New York Stock Exchange.

“The worries are still out there,” said John Wilson, who helps oversee $120 billion as chief market technician at Morgan Keegan & Co. in Memphis, Tennessee. “Nobody is ready to get the trumpets out and herald the end of the recession.”

Stocks and commodities slid as the World Bank said unemployment and poverty will rise in developing nations and predicted a 2.9 percent contraction in the global economy this year. That compares with a prior estimate of a 1.7 percent decline. Growth is expected to return in 2010 at 2 percent, less than the 2.3 percent forecast about three months ago.

Rebound Pared

While the S&P 500 is still up 33 percent from a 12-year low on March 9, the index has fallen 5.1 percent since June 12. Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago. Insiders of S&P 500 companies were net sellers for 14 straight weeks as the market rallied, according to data compiled by InsiderScmaore.com.

The S&P 500 today slid below 900.8, its average level over the past 200 days, in a bearish signal to analysts who study charts to predict market movements.

Nouriel Roubini, the New York University economics professor who predicted the financial crisis, said the global economy may suffer another slump due to higher oil prices and widening budget deficits.

“I see the worry of a double whammy” from energy costs and fiscal burdens, increasing the risk of a setback in the economic recovery, Roubini told a conference in Paris today. Oil may rise to $100 a barrel, he said.

Commodities Slump

Freeport-McMoRan, the world’s largest publicly traded copper producer, plunged 9.4 percent to $46.14. U.S. Steel sank 7.2 percent to $34.87. Alcoa decreased 7 percent to $10.23. The strengthening dollar dulled the appeal of commodities as an alternative investment, helping send copper, gasoline and oil prices lower.

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http://www.bloomberg.com/apps/news?pid=20601087&sid=apRHiYO6UEdQ

[steven johnson]

1. Stocks, Commodities Fall as World Bank Sees 2.9% Contraction

Looks like the 'W' or double-dip recession where there would be a brief uptick in the economic indicators followed by a drop is a real possibility. The systemic problems are worse than the optimists wanted to believe.

Stockmarkets hit by fears of 'double-dip' recession

June 22 (Bloomberg) -- US and European stocks tumbled, sending the Standard & Poor's 500 Index down the most in two months, as the World Bank said the recession will be deeper than previously forecast.


http://www.bloomberg.com/apps/news?pid=20601087&sid=aqNg.FOkoSYY