US stocks dived more than 3 per cent in early afternoon trade on Thursday,extending losses for a fourth day,as a bleak outlook from the Federal Reserve and weak data from China heightened fears of a global recession.
In one sign of the broad gloom,FedEx Corp fell 9 per cent to $66.31 after the worlds No. 2 package delivery company pared its outlook for the full year. FedExs fortunes are often viewed as a stand-in for the wider economys health.
The markets dramatic selloff marked the worst performance in more than month after the previous sessions drop,which was sparked by the Feds statement citing significant downside risks facing the economy. The word significant proved to be significant,said Stephen Wood,chief investment strategist at Russell Investments in New York. This seems like an indiscriminate risk-off environment,where sectors and specific securities and research dont count for as much … investors are jettisoning risk as the outlook gets cloudier.
In addition to the statement on Wednesday,the US central bank detailed additional stimulus measures to help push down long-term rates. Investors worried the latest plan would have little effect on lending and that there appeared to be few solutions to sluggish worldwide demand.
The Dow Jones industrial average was down 388.18 points,or 3.49 per cent,at 10,736.66. The Standard & Poors 500 Index was down 3.05 per cent,at 1,131.23. The Nasdaq Composite Index was down 2.75 per cent,at 2,468.51. The CBOE Volatility Index,Wall Streets fear gauge,was up about 10 per cent.