Widening Trade Deficit Pummels Dow, Dollar; Blue-Chip Average Falls 68 in Heavy Trading
A sobering report on the continuing deterioration in U.S. trade numbers sparked a broad sell-off yesterday on financial markets, with the dollar resuming its retreat against the Japanese yen, long-term interest rates briefly hitting new highs, and the Dow Jones industrial average off 68 points in heavy trading.</br></br>The dive began immediately after the Commerce Department reported that the gap between U.S. exports and imports rose to $11 billion in July, up from $9 billion in June.</br></br>The 22 percent increase in the deficit reflected a sharp drop in exports of U.S. commercial aircraft and an increase in the price of imported oil. Trade in services for the month remained largely unchanged.</br></br>If the trend for the first seven months continues through December, analysts said, the United States could wind up with its worst trade year in history.</br></br>Foreign investors were apparently the first to react to the gloomy U.S. trade numbers, fearing that persistent deficits would lead to further declines in the dollar and, with it, declines in the value of the U.S. stocks and bonds in their portfolios.