US stocks drop on producer prices, more housing woes
(dpa) - US stocks declined Tuesday after producer prices surged and housing construction plummeted by the most in 17 years, prompting investor concerns that the United States has entered a prolonged period of low growth and high inflation.
Wholesale prices jumped 9.8 per cent in July from a year earlier, the Labour Department reported, while the Commerce Department said that housing starts dropped 11 per cent.
Wall Street warnings of fresh writedowns of financial assets related to the housing crisis also led banking stocks lower.
"There's no doubt we're in a period of stagflation now," Peter Kretzmer, a Bank of America Corp economist told the Bloomberg financial news agency.
The blue-chip Dow Jones Industrial Average dropped 130.84 points, or 1.14 per cent, to 11,348.55. The broad-based Standard & Poor's 500 Index fell 11.91 points, or 0.93 per cent, to 1,266.69. The technology-heavy Nasdaq Composite Index lost 32.62 points, or 1.35 per cent, to to 2,384.36.
The US currency slipped to 67.65 euro cents from 68.03 euro cents on Monday. The dollar eroded against the Japanese currency to 109.71 yen from 110.13 yen on Monday.
Gold closed at 816.80 dollars per fine ounce.