According to the AP's news, Wall street plunged because 2 propects:
1. End to interest rate cuts
2. A slowing economy
Soaring of Oil price which passed $96 per barrel. The Federal cut interest rates a quarter point (0.25%) and stated inflation remained a concern. A report from Commerce Department indicated consumers spending in Sep scaled back because worries mounted on housing market and further credit market turmoil. Trade group reported that U.S. manufacturing grew in Oct at the weakest pace since March.
Labor Department's report on Oct job creation will be released on Friday's morning. The data is expected to show unemployment remained steady in October, with payroll growth of 85,000 new jobs, compared with 110,000 in September.
Investors pulling money out of stocks turned to the safe haven of the Treasury market. The yield on the 10-year Treasury note dropped to 4.35 percent from 4.47 percent.
For more news detail, do refer to this link.
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This is the follow-up on this news topic:
Picked from AP:
For instance, on Friday Wall Street got a surprisingly strong report from the Labor Department that showed 166,000 new jobs added in October -- yet no rally followed. A more careful reading of the data indicated that fewer people were employed overall last month.
Even the Fed's decision on Wednesday led to a delayed reaction by investors. At first, the cut was seen as good news and sent the Dow up 137 points. But, on further examination, it showed that policymakers were worried about inflation and oil reaching a new record high -- raising the possibility the Fed might stop cutting rates, and even consider raising them.
"The market always tends to worry about things, and always exaggerates them," said Peter Cardillo, a market strategist with Avalon Partners. "I have a suspicious feeling that is what's happening right now. The market is looking for good economic news, data that doesn't sink the economy into a full-blown recession."
With the Fed unlikely to cut rates, the market wants to see reassuring economic readings. This would indicate that inflation remains in check and the economy continues to plow ahead.
But there are unknowns -- the biggest is the financial sector, hit hard during the third quarter after taking massive write-downs from investments linked to the subprime mortgage industry. Investors at first believed financial institutions like Citigroup Inc. and Merrill Lynch & Co. had taken the bulk of their losses, and would likely have better earnings going forward.
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