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US markets slump after Fitch warns of debt contagion

17 Nov 2011 Evaluate

The US markets slumped on Wednesday, after Fitch Ratings signaled trouble for US banks if Europe’s debt trouble worsens. In another volatile session involving Europe, US markets briefly erased losses on hopes that the Federal Reserve might assist the European Central Bank in its efforts to curb Europe’s debt trouble. Already down, the US markets declined further in the final hour after Fitch stated that unless the Eurozone debt crisis is resolves in a timely and orderly manner, the broad credit outlook for the US banking industry could worsen.

The markets slid even after there were good reports on economic front, figures from the Federal Reserve had industrial production climbing 0.7% in October, illustrating the manufacturing sector is participating in economic growth in the final quarter of 2011. Manufacturing expanded 0.5% after rising 0.3% in September as motor vehicles production increased 3.1% and mining output increased 2.3%. The Labor Department stated that the cost of living dropped 0.1% in October from the prior month, indicating inflationary pressures could be on the decline. The so-called core rate excluding food and fuel costs climbed 0.1%.

The Dow Jones industrial average lost 190.57 points, or 1.58 percent, to 11,905.60. The Standard and Poor’s 500 closed lower by 20.90 points, or 1.66 percent, to 1,236.91, while the Nasdaq composite lost 46.59 points, or 1.73 percent, to 2,639.61.

The Indian ADRs closed in red on Wednesday, Infosys Technologies was down by 1.20%, ICICI Bank was down by 0.64%, Dr. Reddy’s Lab was down by 0.45%, Wipro was down by 0.32% and Tata Motors was down by 0.28%.

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