World stock markets slumped again Monday as a rally on Wall Street dissipated amid growing concern about the health of the U.S. housing market. VOA's Barry Wood has more.
Wall Street had an erratic session Monday, finishing near its daily low. The Dow Jones industrials lost over 64 points to close at 12,050. Broader market indexes were also down in what has become the worst U.S. stock market slump in four years. U.S. stock prices were down over four percent last week following several months of uninterrupted advances.
Bond strategist Joseph Shatz of Merrill Lynch told Bloomberg News that market sentiment has shifted to concern about housing. "People are still trying to determine how bad the impact on the housing market is going to be overall and whether this is going to impact the broader economy in terms of consumer spending," he said.
The housing concern surfaced last week as several mortgage companies warned of impending losses in subprime loans, or loans to customers with poor credit rating. The default rate on these loans is going up.
The sell off that began with a nine percent drop in China a week ago continued in most global markets. Tokyo's Nikkei average lost another 3.3 percent Monday, its biggest one-day slide in nine months. European shares were down an average of one percent. The latest Tokyo decline is blamed on the sharply higher exchange value of the yen, which is up about three percent in the past week.
Market sentiment in America is beginning to shift to an expectation that interest rates could fall later this year.
Meanwhile, jittery investors are bracing for a rocky week, as they anticipate a series of key government economic reports, including the Labor Department's jobs report on Friday.