Renewed fears that the global economic recovery is faltering shook investors across Asia, sending stock markets in the region sharply lower Thursday.  The Nikkei fell below the 10,000 mark for the first time in three weeks.  Dollar and yen rose as hedge funds sold off risky positions and traders trimmed their appetite for risk. 

The Nikkei 225 stock average fell 1.8% to 9,891.10 and Hong Kong’s Hang Seng index plunged 2.3% to 21,264.99 points. In Mainland China, the Shanghai Composite Index dropped 2.3% to close at 2,960.47.  All other major indices in the region ended in the red.   

On Wednesday, US stocks tumbled after a weaker-than-anticipated new home sales report aggravated concerns that the seven-month old rally has gone ahead of any economic recovery.  To add to the bearish sentiment Goldman Sachs lowered its projection for the third-quarter gross domestic product.  The government’s report on third-quarter GDP is due Thursday.  Goldman Sachs said it now predicts third-quarter GDP rose at an annual rate of 2.7%, weaker than its earlier forecast of a 3% rise. 

This morning the Commerce Department reported the economy grew at a 3.5% rate.  The economy’s return to growth follows four straight declines. The stimulus spending and the government ‘s cash-for-clunkers program is expected to have boosted consumer spending in the quarter, with residential investments also higher.

The Dow Jones industrial average dropped 119 points, or 1.2%, to close at 9,762.69 and the S&P 500 index declined 21 points, or 2%, to close at 1,042.63. The Nasdaq composite plunged 56 points, or 2.7%, to close at 2,059.61.  Volume on the NYSE jumped to 1.68 billion shares as declining issues ran ahead of those that advanced by a whopping nine-to-one margin.  The market’s volatility index, the CBOE Vix, continued higher, up 12.4% Wednesday to 27.91.  Riding high on their safe-haven appeal, US Treasuries headed higher and the $41 billion 5-year note auction received good response. Prices on the 10-year increased 10/32 in price, dropping the yield to 3.415%.

All ten S&P500 sectors were in the red yesterday, led by falls in basic materials (-4.0%), oil and gas (-3.2%), financials (-2.9%) and industrials (-2.6%).  The US dollar continued its advance for the fifth straight day, trading up 0.5% against a basket of currencies.  The dollar’s rise saw commodities retreating. Crude prices fell 2.8% to $77.79.

Today’s reports include: Allergan (NYSE:AGN), Eastman Kodak (NYSE:EK), ExxonMobil (NYSE:XOM), Monster Worldwide (NYSE:MWW), Procter & Gamble (NYSE:PG), and Sprint (NYSE:S).

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