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Thursday
Aug042011

US Stocks Tumble on Economic Worries

ABC News(NEW YORK) -- U.S. stock markets tumbled Thursday amid fears of a weakening U.S. economy.

The Dow Jones Industrial Average lost 513 points, the Nasdaq finished down 137, and the S&P 500 dropped 60 points.

The Dow fell 333 points by noon, a drop of 3 percent and plunged 500 points during session lows. It was the biggest one day drop since December 2008. The volatility index (VIX) was up 26 percent.

Fears of a double dip recession are clearly taking hold among traders and economists.

"The market is sending a strong and clear message that the U.S. economy is in a soft patch, the question is whether the soft patch is temporary, or something more serious," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC.

Markets are reacting in particular to weekly jobless claim data from the Labor Department that shows the job market remains weak. In the week ending July 30, there were 400,000 new unemployment claims. This was a decrease in initial claims from the week earlier, but clearly not enough of a decrease to give investors confidence in the strength of the U.S. economy as whole. Jobless numbers for July are due out Friday morning before the markets open.

Fear about a spreading debt crisis in Europe are also contributing to the sharp market decline. Last week's dismal GDP data and weak manufacturing data earlier this week are also among the factors inciting investors' worries.

Copyright 2011 ABC News Radio







ABC News Radio