NEW YORK — A late-afternoon barrage of selling sent the Dow Jones industrials tumbling almost 700 points as weak corporate earnings stoked fears that the government’s financial intervention won’t keep global economies out of recession.
Poor earnings from large companies in disparate sectors — Wachovia, Boeing and Merck — illustrated how wide the downturn has spread. One bright spot was McDonald’s, where third-quarter profits rose thanks to the strength of its low-priced meals.
Even with the aggressive steps the government has taken, Treasury Secretary Henry Paulson told interviewer Charlie Rose on Tuesday, “Clearly, we’re going to have a number of difficult months ahead of us in terms of the real economy.”
Most major indexes fell 6 percent or more. The Dow lost 7.1 percent. Oil prices hit lows last seen in June 2007, trading below $67 a barrel on worries about weakening demand.
Asian stocks tumbled for a second day today, with South Korea’s market sinking more than 8 percent, as a barrage of downbeat company forecasts deepened fears of a global recession. Japan’s Nikkei 225 average lost 5.5 percent, extending losses of almost 7 percent from Wednesday.
World leaders will gather in Washington on Nov. 15 to discuss the meltdown. A senior Bush administration official said Wednesday the forum will be the first in a series of international meetings to discuss what economists predict could be a long and deep downturn.
“We are going into what is very clearly a recession mode,” Blake Jorgensen, Yahoo’s chief financial officer, said Tuesday.
Yahoo is slashing 1,500 jobs.
The Fed announced Wednesday it will boost the interest rate paid to commercial banks on excess reserves.
Credit markets are showing some signs of a thaw. Treasury- bill yields and interest rates banks charge each other have fallen to September levels.
Bank-to-bank lending rates fell sharply. The London Interbank Offered Rate, or Libor, on three-month loans in dollars fell to 3.54 percent from 3.83 percent, falling for an eighth straight day.
Despite declining rates, the volume of loans remained weak.
“We’re making slow prog ress, and confidence is returning, but we’re still not there yet,” said Christopher Cordaro, chief investment officer at RegentAtlantic Capital LLC in Chatham, N.J.
