A disastrous Thursday on Wall Street has been followed by markets plunging across the world overnight, and there are now growing fears Friday morning that the U.S. and even the global economy may experience a double-dip recession.
Equity markets across the world have lost more than $4.5 trillion in value since July 26. There are fears that the slaughter will continue when markets open again in New York Friday. However, others are hopeful that the good news from the Bureau of Labor's jobs report will help to settle nerves.
Employment news showed that the unemployment rate in the U.S. had dropped from 9.2 percent to 9.1 percent. The economy also added 117,000 jobs in the last month.
The news resulted in stock futures rising more than 100 points.
Thursday has been described as a bloodbath as the Dow Jones plummeted 512.61 points, or 4.3 percent, to close at 11,383.83.
The Nasdaq also dropped 136.68 points, or 5.1 percent, to 2,556.39.
The day’s losses meant that for both indexes all gains made for the year to date had vanished.
Analyst Floyd Norris of the New York Times has speculated: “It has been three decades since the United States suffered a recession that followed on the heels of the previous one. But it could be happening again.
“The unrelenting negative economic news of the past two weeks has painted a picture of a United States economy that fell further and recovered less than we had thought.”
Princeton economist Paul Krugman also commented: “It’s not just that the threat of a double-dip recession has become very real. It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.”
Asian markets were thrown into a tailspin overnight as huge drops were seen across the region. Japan lost 3.7 percent, Hong Kong even more drastically losing 4.3 percent. The FTSE in London has also followed the huge falls, which worldwide are the largest since the recession began in 2008.
Traders have predicted another day of chaos today in New York, with many commentators saying the atmosphere on the floor was reminiscent of the banking crisis in 2008.
Despite U.S. politicians coming to an agreement on the debt ceiling earlier this week, concerns linger worldwide that the planned spending cuts will not be enough to get the country’s debts back under control.
In Europe, a recent deal to help the failing Greek economy has not placated fears that the sovereign debt crisis will spread to Spain and Italy, which have also added to the slump in confidence.