U.S. stocks lowest since 2003
WASHINGTON (Reuters) - U.S. and European stocks fell to their lowest levels in 5-1/2 years on Wednesday, as prospects faded for a Washington bailout of the auto industry and data showed U.S. consumer prices dropped at a record pace in October.
Stock prices were also hit also by Federal Reserve forecasts for the U.S. economy to contract in the first half of through 2009, amid concern about the potential for deflation.
U.S. consumer prices plummeted 1.0 percent last month, raising the prospect of deflation if consumer demand fails to pick up. Construction starts on U.S. homes also hit a record low in October, reports showed.
The Dow Jones industrial average dropped 5.07 percent to close below 8,000 for the first time since March 2003, while the S&P 500 Index and NASDAQ Composite each plunged more than 6.0 percent.
"We're witnessing the worst market crash in most people's lifetimes," said David Bianco, chief U.S. equity strategist at UBS in New York. "People seem to enjoy telling each other how bad its going to get and working themselves into a frenzy. It's just becoming silly."
Falling bank stocks and lower commodity prices dragged European shares to their lowest close in 5-1/2 years, and Japanese stocks were hit by concerns about exports and the auto industry.
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