U.S. equities fell today but held their losses in check following a global stock market sell-off tied to fears of a widespread recession.
That fear was stoked in Asia on news overnight that electronics giant Sony Corp. cut its 2009 profit forecast in half. A batch of other profit warnings in Japan added to the pressure.
The Dow Jones industrial average closed down 215.05, or 2.47%, at 8,476.20; the S&P 500 fell 31.34,or 3.45%, ending at 876.77; and the Nasdaq composite closed down 51.88, or 3.23%, at 1,552.03. All numbers are preliminary.
"Once markets regain their composure, people will see real buying opportunities," said David Resler, chief economist at Nomura Securities International.
Overnight, Japan's Nikkei 225 index had fallen 9.6% to its lowest level since April 2003, and Hong Kong's Hang Seng index finished 8.3% lower. In Europe, Germany's main stock index lost about 5% and France's CAC 40 fell 3.5%. The U.K.'s FTSE index also dropped 5% after a government report showed the first monthly drop in GDP in 16 years.
Investors had feared a far worse performance for U.S. stocks as equity futures had traded "limit down" before the opening bell in New York, preventing traders from offering December contracts at lower levels than down 550 points for the Dow and down 60 points for the S&P 500 contracts.
Analysts slashed their forecasts on a number of major companies around the world on prospects the global economy is heading for lower growth. The selling sparked a U.S. dollar rally, as the U.S. is seen as farther ahead in addressing its housing and financial woes.
The dollar climbed to a two-year high against the euro, which was quoted at $1.26 late Friday. The dollar also rebounded against the British pound, which fell to as low as $1.526, a six-year low.
But the Japanese yen rallied vs. the dollar on a dramatic drop in demand for the carry trade, which allows investors to borrow in low-rate markets to invest in markets offering a higher return.
Officials of the Organization of Petroleum Exporting Countries, holding an emergency meeting in Vienna to shore up prices, agreed to cut production by 1.5 million barrels of crude a day, but the light, sweet crude contract for December fell $3.69 to $64.15 a barrel on prospects of lower demand.
