Stock Market Hits Six-Year LowBy the end of Thursday's trading day, the Dow Jones industrial average slipped 89 points, losing 1.2 percent to close at the lowest point since October 9, 2002. Driving this drop were fears of a prolonged recession by investors. Bank stocks took the worst blows, and the losses to the Standard & Poor's 500 index matched the Dow's losses, at 9.5 points, a loss of 1.2 percent. The final close of 7,465.95 matched the low of the last bear market of 2002 and just above the lows seen in late fall after the apex of the financial sector crisis.
Wall Street investors are holding onto their purse strings despite the government stimulus package and mortgage rescue plan announced in the last few days. Investor fears are that these plans won't soften the recession, as the world continues to see an overall economic slowdown.
The Federal Reserve's forecast on Wednesday lowered its expectations saying the economy will go on shrinking, and unemployment is expected to rise. Thursday's unemployment report showed the number of workers continuing to file unemployment claims rose to a record 4,987,000. One bright spot comes from the index of leading economic indicators from the Conference Board; it rose 0.4 percent in January against a revised 0.2 percent in December. Economists predicted it would rise only 0.1 percent.
Billionaire Accused of Fraud Located in VA
The FBI located and served papers to billionaire financial investment company owner Robert Allen Stanford in Fredericksburg, VA on Thursday. Stanford, who owns three Houston-based investment companies, is accused of running a $9.2 billion investment fraud scheme.
The Securities and Exchange Commission had filed a complaint in federal court earlier this week accusing Stanford of fraud. The FBI served Stanford with a copy of the SEC complaint. Stanford doesn't have criminal charges against him and was not taken into custody, but has arranged to turn over his passport to law enforcement. Earlier this week after the news broke, an air charter service in Texas refused to accept Stanford's credit card when he tried to hire a jet.
The news of the SEC investigation of Stanford's business dealings sparked a run on Stanford-owned banks in Antigua and Venezuela on Tuesday. After the bank run in Venezuela saw extraordinary withdrawals, the government there took over the local subsidiary, according to Venezuelan government banking officials.