NEW YORK – Wall Street tumbled again early Friday after the government said new home construction dropped by more than expected last month to the lowest pace since early 1991. The Dow Jones industrials fell 200 points.
Housing starts fell more than 6 percent in September to an annual rate of 817,000 units, the Commerce Department reported. That figure is lower than the 880,000 units forecast by Wall Street economists surveyed by Thomson/IFR. Building permits also sank.
The report was yet another piece of evidence that the nation is struggling with a weak economy that, if the financial crisis is not solved, could dive into a sustained downturn. President Bush on Friday said in a speech that the credit market — where many companies find funding for their operations — will take a while to thaw, but that Americans should be confident that it will.
It's been an erratic week on Wall Street, with the Dow soaring 936 points on Monday, slipping moderately Tuesday, sinking 733 points Wednesday, and then rallying 401 points Thursday. The volatility is not providing investors with much relief, but it is a welcome change from last week's seemingly relentless plunge, during which the Dow logged its worst week ever and Wall Street lost about $2.4 trillion in shareholder wealth.
In the first half-hour of trading, the Dow Jones industrial average fell 213.62, or 2.38 percent, to 8,765.64.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 24.47, or 2.59 percent, to 921.96, and the Nasdaq composite index fell 36.41, or 2.12 percent, to 1,681.30.
The credit markets have been improving after moves by governments around the world, particularly plans to buy stakes in private banks to boost their lending. But there's still high demand for Treasury bills, regarded as the safest assets around, an indication that there is still much fear in the markets.
The three-month Treasury bill Friday yielded 0.52 percent, up slightly from 0.47 percent on Thursday. That indicates a marginal let-up in demand, but the yield has not surpassed 1 percent in more than a week.