Equities plummeted early Thursday, as U.S. investors responded to the negative feedback loop that spun around the globe overnight after the Fed said there were still “significant downside risks” to economic growth. Although weekly U.S. jobless claims ticked down, most of the news about the global economy has been negative over the past couple of days. The IMF slashed its growth estimates for the U.S. and Europe, and ratings agencies have cut their assessments of U.S. and foreign banks in recent days, in part on fears that governments will no longer come to the rescue of problem institutions.
The Dow fell as much as 350 points, and was down 313 points more recently to 10,812. The drop was broad-based, with materials and energy stocks feeling particular pain. Freeport-McMoran Copper & Gold (FCX) was off 9%. Alcoa (AA) was off 5.9%.� Caterpillar (CAT) dropped 5.4%.
Crude oil prices dropped more than 4%, and Treasury yields fell to new modern record lows, with the 30-year note hitting 2.8177%.
The markets also appear to be responding to the failure of policymakers at home and abroad to find common ground on funding issues, from decisions about Greek debt to U.S. government spending. The House of Representatives failed in a surprising vote on Wednesday to pass a bill that would keep the government running through Nov. 18, raising the specter again of a government shutdown. Republican House members defied their leadership to vote no. Current government funding will end on Sept. 30.
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