MercoPress. South Atlantic News Agency

US markets plunge on growing concerns about a recession

Latinamerica followed on Wall Street

United States stocks tumbled lower Friday (anniversary of 19 October 1987 Black Monday) closing a disastrous week sparked by poor bank and company earnings reports plus growing concerns about the state of the economy.

The Dow Jones, NASDAQ and S&P fell more than 2.5%, the largest one-day drop in two months following on US banks reports of falling profits and growing fears among investors that the credit crunch could drive the US economy into recession. Bloomberg News reported an average 17% drop in third quarter profits among more than 30 companies on the Standard & Poor's 500 Index that reported earnings this week. Citigroup Inc, the largest US bank, said profits fell more than 50% and US number two Bank of America Corp's net earnings dropped over 30% as an unprecedented amount of defaults on home mortgages and a glut of unsold houses rocked the US housing market and is beginning to take its toll in consumer confidence and spending. Caterpillar equipment manufacturer warned that the housing slowdown would harm the wider economy and cut its profit forecast. Caterpillar saw its shares down 5.3% to $73.57, and predicted weakness ahead after its earnings results, which missed forecasts. The blue-chip Dow Jones Industrial Average fell 366.94 points, 2.64%, to 13,522.02. The broader Standard & Poor's 500 Index was down 39.45 points, 2.56% to 1,500.63. The technology- heavy Nasdaq Composite Index dropped 74.15 points, 2.65% to 2,725.16. For the week, the Dow was down 4.1%, the S&P 500 3.9% and the Nasdaq 2.9%. The fall came on the twentieth anniversary of Black Monday - the day when stocks saw their biggest fall on the Dow Jones, losing some 23%. Andy Brooks, head of trading at T Rowe Price, said: "Some of the earnings reports were a little disappointing but not that bad; "I think we're responding emotionally to the 20th anniversary of the October 1987 stock market crash. I'd like to laugh except it hurts." For stocks to fall by such proportions nowadays would mean a drop of around 3,000 points based on current market levels. Earlier in the day European markets also showed volatility with the FTSE 100 falling 0.42%; Paris CAC 40, dropped 0.46% and in Frankfurt the DAX lost 0.75%. Latinamerica followed on Wall Street with Brazil's Bovespa and Mexico loosing most ground, 3.74% and 3.08% respectively. Argentina's Merval was down 1.48% and only Chile's market climbed 0.9%. Meantime the US dollar also continued its downward plunge against the Euro, reaching a new all-time low of 69.94 euro cents from 69.97 euro cents on Thursday. The US currency also fell to 114.57 Japanese yen from 115.50 yen. Finance leaders from G7 nations meeting in Washington on Friday sought to mitigate the damage to the global economy in the wake of the credit crisis. Ministers issued a statement pledging that they were "committed to doing our part in sustaining strong global growth," ahead of talks over the weekend involving the IMF and the World Bank