Despite unprecedented and far-reaching economic bail-out and stimulus packages being implemented around the world, Wall Street stocks fell hard and fast these days as investors focused on corporate earnings forecasts for that coming months.
Major companies have been releasing less-than-encouraging profit forecasts for the fourth quarter, such as DuPont Co., Sun Microsystems Inc. and Texas Instruments. As of the writing of this article, the Dow was down roughly 350 points on the day, after recovering slightly from an initial loss of over 400 points.
Numerous economists and market experts seem to believe that whilst the cash infusions into the credit markets have limited some from the damage that may have otherwise occurred, the overall economy is headed for a prolonged recession that will put a strain on most companies and the labor force. But overall, much from the current situation in with the stock industry is based purely on fear and the perception that prosperous times may never return. Irrational, yes, but it's human nature to resort to a herd mentality in times of grave uncertainty -- and that's what we're seeing using the stock market.
On a positive note for consumers, gas prices continue to fall at the pump, whilst the price of oil has dropped below $67 per barrel. A stronger U.S. dollar has recently trumped concerns about OPEC reducing oil output within the near term.
The current economic downturn is truly a global occurrence, with stocks in Japan, Excellent Britain, Germany and France all falling at least 4% today. Until credit markets loosen firms are able to access capital for growth, it is most likely that the current climate will remain unchanged. But just when you think things can only get worse, they’ll likely get better. Hopefully our money’s in the right place when that happens.
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