Tuesday, October 21, 2008

Dow dropped 230 points today

The stock market will continue to be a roller-coaster. Today's drop came after forecasts from Dupont, Sun Microsystems and Texas Instruments raised fears that companies’ outlooks for the fourth quarter and beyond could indeed signal a severe economic downturn. But really who is looking at this economy and thinks we are not in a severe economic downturn.

After pretty good gains yesterday, the Dow Jones industrial average fell 2.5 percent, while the Nasdaq composite index lost more than 4 percent following weak showings by technology names.

The strain on the credit markets have continued to ease further in response to the sweeping series of bailout measures by world governments, including a joint U.S. and European plan to buy stakes in private banks to boost to their lending. Demand for Treasury bills, usually regarded as the safest investment assets around, has improved from last week in a sign that credit markets are gradually returning to a healthy state.

Bank-to-bank lending rates continued their retreat, another indication that credit is becoming easier to obtain. The London Interbank Offered Rate, or Libor, dropped to the lowest levels in more than a month.

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