Wall Street bounces back but volatility remains in markets
Wall Street shares rebounded Wednesday after a stocks sell-off in Europe prompted by continued concerns about the US economy and mortgage industry. Asian markets were also volatile reflecting similar sensitivity.
The Dow Jones fell below 12,000 points for the first time in four months, but bounced back into positive territory. Earlier London's FTSE 100 index slumped 160.6 points, or 2.5%, at 6,000.7 with French and German markets also hit. The sell-off came as stocks were starting to recover from a sharp slump that rocked markets late last month. A 2% slump in the US on Tuesday sparked the latest round of global stock turmoil. Analysts said that market volatility was likely to continue, especially as many markets and stocks had climbed to their highest levels in more than six years. In New York, the Dow Jones closed up 0.48%, 57.44 points at 12,133.40 having slipped below the psychological 12,000-point level earlier. The Nasdaq gained 0.9% to 2,371.74. Investors searching for bargains and the strength of energy firms in the face of rising oil prices were behind the rebound, analysts said. Earlier France's Cac-40 index closed 2.5% lower at 5296.22 points, while Germany's Dax index fell 2.7% to 6,447.7. The latest round of selling has been sparked by concerns over the US sub-prime mortgage market. Sub-prime lenders, who target consumers with poor credit histories, have been hit by an increase in defaults and bad loans. Figures have shown that late mortgage payments and home repossessions in the US are at their highest level since records began. New Century, the second-biggest sub-prime mortgage lender in the US, is seen by many observers to be close to bankruptcy - and the fear among investors is that this will ripple out into more stable parts of the economy. Japan's Nikkei fell 2.9% on Wednesday, and in Hong Kong, India and Australia indexes lost more than 2%. Although analysts said Asia's leading economies remained fundamentally strong, markets across the region are particularly sensitive to signs of a possible economic slowdown in the US.