Wall Street suffers huge losses

June 27, 2008 12:31:03 AM PDT
Stocks sank again on Thursday to a low not seen since 2006. The Dow closed down almost 360 points, spurred by grim news about gas prices. That same news sent oil futures to another record high, $139.64 a barrel.

The stock market's hopes for a recovery now appear to have been premature, as new signs of trouble rattled investors.

The Dow plunged more than 350 points to a 21-month low. The Nasdaq took a tumble too, losing 3.3 percent.

"Oh my God, look what's happening," said George Papadoyannis a senior financial advisor.

For financial advisors, it's been a stressful day. Papadoyannis is a senior branch manager for Ameriprise in San Mateo.

"Whenever we a setback like we had today, and if you care, it shows or you're worried," said Papadoyannis.

The disappointments seem to come at nearly all levels, from the big banks to the auto industry, but perhaps having the most negative impact on the market is oil prices. Crude hit a record high, closing at more than $139 dollars a barrel. What's more, the investment bank CIBC predicts a barrel will reach $200 by 2010, a price that could lead to gas prices of $7 dollars a gallon.

"Despite the fact that people are economizing on their oil consumption. That means a negligible difference to world demand," said Jeff Rubin from CIBC World Markets.

It was only a few weeks ago that Wall Street seemed ready for a rebound. No telling when that time will come but USF School of Business professor, Jon Fisher, believes this latest correction is worse than the one in 2000 and 2001.

"The last correction involved simply the implosion of one sector, which was the technology/dot-coms, and it was subsequently offset by equity in housing. This particular correction involves a half-dozen points of failure including unemployment, inflation, of course the housing liquidity crunch," said Fisher.

The big fear on Wall Street is that the financial news will force Americans to spend less, but financial advisors are doing what they can, telling their clients to hang in there.

"If you're diversified and if you're properly diversified, based on what you're looking for to do, then you're going to be okay," said Papadoyannis.

If the predictions for oil and gas prices hold true, there will most certainly be fewer drivers on the road. The report predicts as many as ten million fewer cars by 2012.


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