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Stocks, Futures Plunge as Panic Spreads
Aug 5,2011 11:13CST
data analysis
SHANGHAI, Aug. 5 (SMM) –Worries towards another global economic recession among panic investors led US stock prices to plunge overnight

SHANGHAI, Aug. 5 (SMM) –Worries towards another global economic recession among panic investors led US stock prices to plunge overnight, with Dow Jones index plummeting 512 points or 4.31%, which in turn led to global plunge of stock and commodity prices.

US investors have realized that FED stimulus package failed to work, and the US economy may start another recession. New sources said Italy and Spain may require more aid from the European Union, and European stock prices plunged as a result. The information that Italy and Spain may plead for help will negatively influence US exports, which shattered the possibility for the US economy to recover on its own. Dow Jones index has dropped below its closing level at the end of 2010. Standard & Poor’s 500 index fell 2.6% lower than its closing level on December 31st 2010m, with most losses reported on natural resources and energy sectors. NASDAQ index fell 1.5% lower compared with closing level at the end of 2010.

NYMEX-September light crude oil price closed USD 6.11/bbl lower overnight, to USD 85.82/bbl. CRB index closed at 327.97, down 9.35 points or 2.77%. As market worries towards spreading of European debt crisis and weak global economic recovery turned strong, risk aversion sentiment surged, and after Japanese central bank announced to scale up influence of its easing monetary policies, commodity futures priced with US dollar were pressed down. Falling stock prices in Europe and the US also forced investors to sell their risk assets in order to make up for warrants. As panic sentiment turned stronger in major markets, SMM expects commodity prices to keep falling in the short term.

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