June 21 - Stocks in free-fall after data point to global weakness and Goldman Sachs tells clients to short the market. Conway G. Gittens reports.
There was a bear stampede on Wall Street with global economic growth too anemic to ignore. Throw in advice from Goldman Sachs, telling clients to bet stocks are on the way down, and Wall Street suffered its biggest defeat in three weeks. Stocks tumbled at least 2 percent with a 250 point free-fall for the Dow. The market is scaling back optimism Central Banks will soon come to the rescue, while at the same admitting a certain reality, says Kenneth Polcari of ICAP Equities. SOUNDBITE: KENNETH POLCARI, MANAGING DIRECTOR, ICAP EQUITIES (ENGLISH) SAYING: "People were thinking that this market was just going to keep going higher; that we were that we were the prettiest girl on the street and so there was no place to go but here. Meanwhile, all our macro data was pointing to a weaker U.S. economy, a weakening structure within. We haven't really addressed the fiscal problems in this country." The day's data highlight those problems: Business activity in the mid-Atlantic region was much worse in June as weakness from overseas impacts sales at home. The labor market stuck in neutral. The number of Americans lining up for unemployment benefits was little changed last week. Housing added yet another concern. Sales of previously owned homes dropped in May after a big jump the month before. The only slightly encouraging sign came from a gauge of future economic activity, suggesting the economy continues to grow at a snail's pace. Economic weakness weighed heavily on oil prices, crude oil nose-dived to nearly $78, a 9-month low. In Europe: Spanish banks need up to a 62 billion euro rescue, according to two audits. Some say Spain itself may need a rescue as debt yields stay at euro zone era highs. Major European markets finished to the downside. Conway Gittens, Reuters