News Wrap: Stocks Plunge Over Consumer Confidence Concerns
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HARI SREENIVASAN: Wall Street went back into meltdown mode today over new worries about economic growth. The sell-off started earlier in Asia. It intensified domestically after news that U.S. consumer confidence fell sharply this month.
The Dow Jones industrial average lost 268 points to close at 9870. The Nasdaq fell 85 points to close at 2135.
Joining me now from the floor of the New York Stock Exchange is Susie Gharib, anchor of “The Nightly Business Report” on PBS.
Thanks so much for being with us.
SUSIE GHARIB: Hi, Hari. A difficult day today here at the New York Stock Exchange.
HARI SREENIVASAN: Yes. Walk us through how that kind of trickled over from Asia and all the way over in the U.S.
SUSIE GHARIB: Well, you know, there’s been a lot of nervousness about the outlook for the U.S. economy all along and for global growth.
But what worried everybody today, that, overnight, there was a report saying that the Chinese economy, the pace of growth is going to be slowing down. Now, as you know, China has been a powerful driver of global growth. And if China going to slow down, there are a lot of questions about the potential for global growth.
So, the Shanghai markets sold off. European markets followed. And then the U.S. markets followed because of that consumer confidence report that came out showing a big drop in consumer confidence. And guess what the big worry is there? Jobs. Everybody is worried about the outlook for the job market.
HARI SREENIVASAN: Well, is that consumer confidence number reflective of what’s been happening to the overall market now? It’s been six months. It’s down about 12 percent. And, really, a lot of times, the market seems to be just going sideways.
SUSIE GHARIB: Well, you know, it sort of builds on itself. If your house is worth less, the prices are down, you see the stock market, your stock portfolio is less, your confidence about growth in the future becomes, you know, worrisome.
And the big question now is, will I be able to get a job? Will I be able to keep my job? And there’s an important jobs report coming out this Friday. And it’s expected to show that the economy lost jobs in June. This will be the first time for this year. So, that’s worrisome. The headline number is 115,000 jobs lost.
You have got to remember some of that is primarily due because of census workers being removed from the payrolls. But investors are going to be dissecting that report very carefully on Friday.
HARI SREENIVASAN: OK.
And, very quickly, while I have you here Citigroup had a big sell-off at the end of the day.
SUSIE GHARIB: Yes. You’re right about that.
What happened was that Citi shares were halted here at the New York Stock Exchange at 1:03 Eastern time because of a big drop in shares mysteriously, 17 percent down. So, circuit breakers kicked in. Five minutes later, it was realized this was an erroneous trade. The trades were canceled. Shares resumed at 1:08.
And by the closing bell, the stock was down by about 5 percent, $3.73, on Citi shares. The point is that those new circuit breakers that regulators put in, they’re working. And today was evidence of that. And hopefully, if this situation happens again, it will prevent one of those flash crashes that we saw in May from happening.
HARI SREENIVASAN: All right. Susie Gharib, anchor of “The Nightly Business Report” on PBS, thanks so much.
SUSIE GHARIB: Great talking to you.
HARI SREENIVASAN: House and Senate negotiators will reconsider part of their deal on financial regulation reform. The bill needs 60 votes to advance in the Senate, but several key Republicans now oppose a fee on big banks and hedge funds.
And the bill lost a Democratic vote with the death of West Virginia Senator Robert Byrd. Even so, President Obama voiced confidence today after meeting with Federal Reserve Chairman Ben Bernanke.
U.S. PRESIDENT BARACK OBAMA: Senators, hopefully on both sides of the aisle, recognize it’s time we put in place rules that prevent taxpayer bailouts and make sure that we don’t have a financial crisis that can tank the economy. And I think there’s going to be enough interest in moving reform forward that we’re going to get this done.
HARI SREENIVASAN: On another front, the top economic officials at the United Nations called today for less dependence on the U.S. dollar. They said the global financial crisis exposed the danger of relying entirely on U.S. monetary policy.
The U.S. Supreme Court has reaffirmed a ban on unlimited giving to political parties. The ban against so-called soft money was a key part of the 2002 overhaul of federal campaign finance law. Last January, the court allowed corporations, unions and other groups to fund federal elections. The Republican National Committee unsuccessfully argued political parties should have the same rights.
Tropical Storm Alex has forced crews in the Gulf of Mexico to halt their oil spill cleanup operations. High winds and seas up to 12 feet have stopped the skimming of oil from the ocean’s surface. Efforts to burn and capture the oil leaking from the deep-sea well continue. The storm itself is far away, heading toward the Mexico-Texas border, for a possible landfall on Thursday.
Meanwhile, Vice President Biden was in the region. He toured a command center and met with officials, including Coast Guard Admiral Thad Allen.
Google announced today it will stop redirecting its users in China to an unfiltered search site in Hong Kong, and instead will give them a link to use those same services. The company shut down its China-based search engine in March to avoid censorship, but the Chinese government threatened not to renew Google’s operating license, which expires Wednesday.
The world governing body for soccer, FIFA, will consider using video technology, including instant replay, after all. The announcement today followed a storm of criticism. On Sunday, a referee disallowed a goal by England that was clearly inside the net. Hours later, an Argentine player scored a goal even though he was clearly in front of his Mexican opponents, making him offside.
The president of FIFA apologized today, but he also urged patience.
SEPP BLATTER, president, FIFA: I deplore when you see the evident referees’ mistakes. But I have to come back that it is not the end — the end of the competition. It’s not the end of football.
HARI SREENIVASAN: Later, soccer officials announced the two referees who made the blown calls will not be working any more games in this World Cup.
Those are some of the day’s major stories — now back to Gwen.