US Stock Market Falls 400 Points

NEIL KING JR. writes:

Crude oil notched its largest price jump ever on Friday, leaping nearly $11 to more than $138 a barrel, on news of a weakening dollar and continued jitters over the reliability of world supplies.

The surge, coming just as many analysts thought oil prices were set to fall, sent stocks plunging amid fears that the U.S. economy could be in for a combined bout of inflation and slow growth. The skyrocketing price of oil, now up more than 44% so far this year, is battering the airline and auto industries and causing consumers to cut back on driving and nonessential spending.

U.S. Fed Cuts Prime Interest Rate; Asian Markets Rise

YURI KAGEYAMA writes:

TOKYO - Asian stock indexes rose sharply Wednesday, rebounding from steep losses in the previous two days after a surprise interest rate cut by the U.S. Federal Reserve.

Japan's benchmark Nikkei 225 index gained 423.82 points, or 3.37 percent, to 12,996.87 points on the Tokyo Stock Exchange in early trading. It had fallen 5.7 percent Tuesday — its biggest percentage drop in nearly 10 years — on fears of a recession in the U.S.

The Korea Composite Stock Price Index rose as much as 3.1 percent in the opening minutes of trading. The Kospi slightly pared gains to trade up 2.7 percent at 1,652.39 about 30 minutes into the session. The Kospi fell 4.4 percent Tuesday and 3.0 percent Monday.

European stocks fell sharply at their opening Tuesday, then rose in volatile trading ahead of the Fed's decision to cut its key rate to 3.5 percent from 4.25 percent, and rose even more afterward. The U.K.'s FTSE 100 finished up 2.9 percent at 5,740.10, while France's CAC 40 gained 2.1 percent to 4,842.54. In Germany, the DAX ended barely down, off 0.3 percent at 6,769.47, as utilities RWE and E.On fell but financials such as Deutsche Bank rose.

The surprise Fed move was aimed at fears that trouble in financial markets from the U.S. subprime crisis was spreading to the broader economy. Interest rate cuts tend to boost stocks. The Canadian central bank quickly followed, lowering its key rate by a quarter of a percent to 4 percent.

Pre-Presidential Election Economic Jitters

Not being an economist, the following is just speculation. Speculation? Hmm, seems speculation is a major part of the U.S. and World stock markets. Panic on the floors of the stock exchanges around the world. All due to what seems obvious to me: a trumped up tale of economic woe in the United States on the eve of a presidential election. Not to say that our economy is not in trouble; just that it has been in trouble for several years. No one seemed to get this excited about it, though. Now, just before our elections and during our primaries, everyone is talking about a possible recession. What weird timing. Why talk about something that has not happened in order to make it happen? Make it happen so that voters will turn out against the Republicans and vote for Hillary Clinton who keeps telling us that we are in trouble. I didn't notice that I was in trouble until she told me I was. Of course, Hillary isn't the only one telling us that we are in an economic downturn - heck - down spin as of yesterday! The world's gone mad with worry. And worry begets fear, and fear begets panic, and panic begets a worldwide economic slowdown. How bizarre is that?