News / Economy

Global Stock Markets Drop Again on Economy Fears

A currency trader passes by a screen showing the falling Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, August 19, 2011
A currency trader passes by a screen showing the falling Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, August 19, 2011

Stock markets fell across the globe on Friday, as investors showed new concern about the struggling U.S. economy and the stability of the European banking system.

The three major U.S. stock indexes - the Dow Jones Industrial Average, S&P 500 and NASDAQ - all dropped more than one percent Friday, following their decline of four to five percent on Thursday.

Asian stock indexes dropped sharply Friday, and European markets retreated as well, although not as much as on Thursday.  

Analysts said that fear had overtaken stock trading, with many investors worried that officials in Europe and the U.S. will not be able to solve vexing economic and government financing issues.

In Europe, the concern is that banks are not strong enough to handle the continent's debt problem sweeping through its financially troubled governments.  Investors are also worried that U.S. politicians will not be able to reach agreement on long-term spending cuts to trim the country's burgeoning debt, or boost the economy enough to cut the nation's unemployment rolls.

The U.S. government reported that unemployment increased last month in more than half of the country's 50 states.

With the global stock sell-off this month, more than $6 trillion has been erased from investors' portfolios.

As they abandon stocks, many investors have been buying gold, briefly pushing the price of the precious metal to a new high Friday above $1,880 an ounce.  Its value is up 31 percent this year.  Investors have also looked to the Swiss franc as a safe haven from the volatility of stock ownership, and its value has risen recently against the value of 16 other major currencies.

Japan's Nikkei index lost just over two-and-a-half percent at the closing bell, while the Kospi index in Seoul plunged over six percent by the end of its trading session.  Indexes in Hong Kong, Sydney, Singapore and Taiwan all closed more than three percent below Thursday's close.

Europe's main indexes lost one percent or more.

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