- Stocks are down 13 percent from their July 22 peak.
- The VIX volatility index averaged 35 in August, up sharply from July.
- Household wealth losses so far this quarter total about 2.2 Trillion
The stock market slump has given Americans yet another reason to feel lousy. It’s more than a struggling economy and high unemployment. The government is dysfunctional. The U.S. has lost its top credit rating. European financial markets are sending out bad vibes. All this has frightened investors and hammered stock prices, compounding fears of a double-dip recession and sending consumer confidence to levels not seen since the financial crisis. Will the stock market derail the recovery?
The market is likely to be on edge this morning after European stocks and the euro took a beating yesterday. Germany’s DAX index fell 5 percent after Chancellor Angela Merkel’s Christian Democratic Union was trounced in state elections Sunday. Europe’s sovereign debt crisis and weak economic growth on both sides of the Atlantic continue to spook investors.
Worries swirled anew in the U.S. on Friday, when the Labor Dept. said job growth ground to a halt in August. Payrolls didn’t grow at all last month. The gains in June and July were less than first reported, and the jobless rate held at 9.1 percent. Although the Communication Workers of America strike against Verizon subtracted some 45,000 workers from payrolls, the August showing was still well below the 70,000 or so economists had expected. Stocks tanked, and the pressure on policymakers to act has ratcheted up. Wall Street will be listening closely to Federal Reserve Chairman Ben Bernanke’s speech in Minneapolis this Thursday for a sign of further policy action at the Fed’s Sept. 20-21 meeting.