US stocks slumped yesterday amid the threat of war on Iraq, Federal Reserve chairman Mr Alan Greenspan's warning on the ballooning government deficit and data showing a weak economy.
The blue-chip Dow Jones industrial average lost 201.76 points, or 2.35 per cent, to 8,379.41, according to the latest available data. The broad Standard & Poor's 500 slid 22.54 points, or 2.48 per cent , to 886.91. The technology-packed Nasdaq Composite Index fell 35.77 points, or 2.72 per cent, to 1,279.68.
The key semiconductor equipment sector was hit as well as leading firms such as McDonald's and Sun Microsystems.
Wall Street was rocked by a sharp increase in the US current account deficit, which showed the economy took imports at a record pace in the second quarter. The government also said the number of Americans signing up for state unemployment benefits last week rose unexpectedly to the highest level in more than four months.
Stocks dropped at the start of trading in reaction to that double dose of data, which heightened concerns over the outlook for the economy.
"There is nothing for investors to sink their teeth into . . . every rally in God knows how long has failed and that is discouraging," said Mr Uri Landesman, portfolio manager at Arlington Capital Management. "We won't rally until a few companies start telling us things are improving and orders are getting better. We're not getting that".