US Shares Badly Hit By Financial Worries

By Stewart Douglas

Shares on the US stock markets have closed significantly down over the course of trade today, after concerns from the mortgage market threatened to lead to a worldwide credit crunch.

Trading on the Dow Jones, Nasdaq and S&P were all down over the course of today, after what has been a week of recovery for worldwide stocks.

The Dow Jones shed just shy of 200.00 points, whilst both the Nasdaq and the S&P closed over 1.5% down on yesterday’s trade, despite good performance throughout the first half of the week in recovery from fresh worries about the US economy.

Analysts have predicted that mortgage markets throughout the US and Europe could continue to fluctuate over the coming weeks and months, with both the Federal Reserve and the European Central Bank investing money to prop up flailing mortgage lenders.

The European Central Bank today announced a cash injection of almost 100 billion euros to help bolster banking markets, after fears of a lack of liquidity and impending credit crunch.

With the crisis in sub-prime mortgage lending in the US continuing to ruin mortgage lenders, a dormant housing market, and fears of instability across European markets, banks are increasing interest on loans made to one another, showing an apparent increase in risk as a direct impact of worldwide credit fears.

Experts have predicted that a lack of credit availability in the worldwide market could lead to a global recession, and the ECB and Federal Reserve’s interventions have been taken as steps to mitigate any potential resulting global economic damage.

The situation stems back to the stagnant US economy, and the scandal in the sub-prime mortgage market which has driven many lenders to the brink of liquidation, with increasing arrears and foreclosures necessary to reclaim equity.