US stocks fell about one percent yesterday. Bloomberg reports:
U.S. stocks fell, sending the Dow Jones Industrial Average to a three-month low, as FedEx Corp.'s results and Fifth Third Bancorp's dividend cut reinforced concern bank losses and record oil will prolong the slump in profits...
The S&P 500 dropped 13.12 points, or 1 percent, to 1,337.81. The Dow Jones Industrial Average decreased 131.24, or 1.1 percent, to 12,029.06, its lowest since March 17. The Nasdaq Composite Index lost 28.02, or 1.1 percent, to 2,429.71. Three stocks fell for each that rose on the New York Stock Exchange.
European stocks were down even more. Reuters reports:
European stocks fell on Wednesday, as slipping crude knocked oil shares and financials took a fresh battering after U.S. banks Morgan Stanley and Fifth Third revealed credit-related struggles.
The pan-European FTSEurofirst index ended down 1.4 percent at 1,251, having earlier fallen to 1,246.62, its lowest level since the end of March...
Around Europe, Britain's FTSE 100 index .FTSE fell 1.8 percent, Germany's DAX .GDAXI shed 1 percent and France's CAC-40 .FCHI dropped 1.4 percent.
The large fall in the FTSE 100 occurred despite a surprise improvement in the Confederation of British Industry's monthly industrial total order books balance to +1 in June from -10 in May.
Perhaps the latter means that, with one survey showing UK inflation expectations at the highest level since 1992, monetary policy will not be loosened as much as some had expected. Reuters reports BoE Governor Mervyn King's latest speech:
The economy is slowing and has to do so to help cool inflation, Bank of England Governor Mervyn King said on Wednesday.
In his annual Mansion House speech to City of London bankers, King repeated it was still unclear where interest rates would have to go to get inflation back to the two percent target but said the BoE would take whatever action was needed.
"The rise in commodity prices cannot, by itself, generate sustained inflation in the United Kingdom unless we allow it. We will not. So although inflation in the UK will rise in the short term, inflation will then fall back," King said.
"We believe that a slowdown in the economy this year, creating a margin of spare capacity, will be necessary to dampen price and wage pressures and ensure that we fulfil our remit by returning inflation to the target."