Fear sends investors scrambling for cover

Despite hopes that the market might stabilize, volatility returned to Wall Street Thursday as major indexes dropped and gold reached a new record. 

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LOS ANGELES (Catholic Online) - Seeking a safe haven from a barrage of bad economic news today, investors rushed their money to safety buying US bonds and pushing their yield as low as 2%. The bad economic news came first from Morgan Stanley which foretasted minimal economic growth.

The housing industry followed with reports that it is still behind expectations for recovery, with sales dropping by 3.5% at a time when a rise was expected. and US manufacturing was reported to be slowing, significantly, not increasing. The level of uncertainty has made investors skittish at what is likely a critical time for US and world economic recovery. Fears of a "double-dip" recession continue to grow and investors are reacting to those concerns.

Key Figures

DOW: -435.75 points, or -3.82% to 10,974.46

Nasdaq: -122.57 points, or -4.88% to 2,388.91

S&P:-52.74 or -4.42% to 1,141.15

Morgan Stanley's report is forecasting a global economic slowdown as the United States and particularly Europe appear on the brink of a recession. Investors are wary and cannot seem to find any sector where enough growth is forecasted to prevent it. Additionally, US manufacturing figures appeared recessionary when compared to 2009 recession figures. The Philadelphia Federal Reserve's regional manufacturing index was down 30.7 in July, which denotes substantial economic slowdown for July. The last time the reading was that low was in March 2009, during the last recession. 

Investors moved money into gold, a traditionally safe investment. Despite concerns that gold has been on a bubble, the price continues to rise, and if a recession hits, worries about a bubble might burst before the price does. Gold is now around $1,821 per ounce. 

Other key indicators have not been very positive. The Wall Street fear gauge, a number which represents the amount of "fear" on Wall Street is a high 41.4%. Anything above 30 is considered significant. Also, jobless claims are sharply up, to a total of 408,000 for the week of August 13. 

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