Dow Jones falls following bad economic news

03 October 2008 22:21  [Source: ICIS news]

HOUSTON (ICIS news)--The Dow Jones Industrial Average fell by 157.47 points to close on Friday at 10,325.38, wiping out earlier gains as a cascade of bad economic news offset the passage of a $700bn (€504bn) bailout bill.

A high unemployment rate for September and news that the state of California may seek its own financial bailout lead to the downfall.

Among chemical companies, shares of ethanol producer VeraSun were among the worst chemical performers on the New York Stock Exchange, falling 12.13% to reach $2.10.

Metal chemicals producer Quaker Chemical saw shares fall 6.89% to reach $22.30.

Soda ash producer FMC experienced one of the largest gains among chemicals, with shares rising 12.79% to reach $45.50.

Among the largest chemical companies, DuPont shares rose 0.03% to reach $38.80. Dow Chemical shares fell 1.58% to $29.89.

Potash Corporation of Saskatchewan (PotashCorp) rose 1.98% to close at $95.36/share.

Earlier in the day, the Dow Jones was up more than 300 points. It lost all of its gains despite the passage of the bailout bill.

The package will allow the US government to purchase mortgages and other distressed assets from lenders, with the intent of restoring the nation's credit markets.

The passage, though, was expected and came as no surprise to the market.

Moreover, the market was hit by more bad news.

Bloomberg reported that the London interbank offered rate (Libor) reached 5.33%, an all-time high. The rate rose to 4.33% for dollars, the highest since January.

Tightening credit had led to the governor of the most populous US state to ask for a federal loan, according to a report published by Reuters.

Arnold Schwarzenegger, governor of California, said that the state is unable to sell $7bn of debt because of weak credit markets, Reuters reported.

In addition, the US Department of Labor reported that September's unemployment rate was 6.1%, unchanged from August. However, the rate was down 1.4 points from September 2007.

($1 = €0.72)

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By: Al Greenwood
+1 713 525 2653

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