Stocks sharply lower
The Russell 2000 (NYSE: IWM) and the Dow are dropping following more bad news about the U.S. economy. At 2:48 p.m. the small-cap index was down 4.93 points, or 0.66%, to 746.61. The Dow Jones Industrial Average (INDU) had shed 243.54 points, or 1.89%, to 12,617.93.
Manufacturing activity in the mid-Atlantic region didn’t increase in August, the Philadelphia Federal Reserve Bank announced at 12 p.m. ET.
The regional Fed bank’s index of manufacturing activity showed a reading of 0, compared with a reading of 9.2 in July. The majority of firms reported no change in activity from July, while 21% of firms reported a decrease, the same percentage as those reporting an increase.
The major U.S. indices started sliding immediately after the numbers were released, with the Russell 2000 surrendering its tiny gain and the Dow sinking even deeper into the red.
Largely disregarded was news that the region’s manufacturing executives were somewhat more optimistic about future activity than they were in July.
Investors’ were already nervous following news that Countrywide Financial Corp. (NYSE: CFC), the largest U.S. mortgage lender, announced that it had to take out an $11.5 billion bank credit line in order to continue making loans.
That’s the latest sign that the subprime contagion has profoundly infected even mainstream lenders, resulting in a credit squeeze.
Elsewhere, the price of oil is down more than $2 to just below $72 a barrel.
