American International Group Inc., the largest global insurance company, posted its highest quarterly deficit in 89 years. The following two weeks saw a landslide decline in its stocks. Sprint Nextel Corp. the third largest US wireless carrier, also recorded a decline. The figure was near the company's six-year low. All the ten industries listed in the Standard & Poor's 500 Index saw significant losses, but banks and phone companies were hardest hit.
The Standard & Poor's 500 Index fell by 37.05 points to 1,330.63. This was a 2.7% decline, the biggest one recorded since February 5, 2008. The Dow Jones Industrial Average slipped 315.79 points to 12,266.39, 2.5% slide. The NASDAQ Composite Index fell by 60.09 points to stand at 2,271.48, a loss of 2.6%. During this time, for every rising stock on the New York Stock Exchange, eleven were slipping.
Credit markets have also faced substantial losses. Analysts are predicting a grim future. Lehman Brothers Holdings Inc., for example, slipped $3.69 to $50.99. Bear Stearns Cos' fell by $4.36 to $79.86.
Subscriber loss to companies facing a decline in stock value was also estimated to be substantial. Sprint declined 98 cents to stand at $7.11. The estimated subscriber base loss was 1.2 million in the first quarter itself. This amounts to 2.2% of the company's wireless customer base.
Exxon Mobil Corp slipped $2.37 to $87.01. Chevron Corp. declined $2.36 to $86.66. Both crude oil and natural gas, which were registering a good run for quite some time, beat a hasty retreat in New York.
Although many companies posted losses, a few did gain. Novell Inc registered the highest gain in the Standard & Poor's 500 Index. It added 91 cents to stand at $7.45. It was an increase of 14%. The company is the second largest seller of the software 'Linux operating-system' in US.
Gap Inc. registered an increase of 72 cents to $20.17. It is the biggest clothing retailer in US. The company predicted more future gains. 3Com Corp. has increased by 38 cents to $3.29. That was a 13% increment.
February 29, 2008 witnessed frenzied trading activity on the NYSE. 1.76 billion shares changed hands. The average daily volume of share trading in NYSE had been 1.59 billion in the last 3 months. The business barometer of the National Association of Purchasing Management-Chicago stood at 44.5 in February 2008. This was a contraction as per their scale.
February saw an increase in consumer expenditure in US. This led to an inevitable increase in prices. A slow down on production coupled with an increase in consumer demand points to an inflationary situation. The purchasing power of consumers is falling as a spiraling effect. The inflation rate as reported by the Federal Reserve is at 0.3%.
Returns on Treasury securities fell. The investors are anticipating further interest rate slashes by the Federal Reserve. The two options being considered by traders were a 3 point cut as opposed to a half point cut in the March 18th meeting of the Federal Reserve. The central bank fixed the overnight lending rate at 3% on January 30th.
The global economy is bearing the brunt of the recession in the US. Europe and Asia are all reeling under the ripple effect of the US slump. Europe's Dow Jones Stoxx 600 Index fell by 1.4 percent, MSCI EM Latin America Index slumped by 4.5 percent and MSCI Asia Pacific Index recorded a loss of 1.2 percent.
Japan posted the second-biggest fall in equities after US with a decline of 1.6 percent in the Topix index. Canada's Standard & Poor's/TSX Composite Index has fallen by 1.8%. Brazil's Bovespa has slipped by 0.6%. The Russell 2000 Index slipped to 686.18, a 2.8% fall.
The Dow Jones Wilshire 5000 Index declined to 13,455.96. It is the most comprehensive measure of U.S. Shares, which registered a 2.6% fall. Companies in the financial sector and the telecom sector were the worst hit by this financial market slump.
