Investors Fear Growth Will Fail To Revive Stocks
A new fear is helping fuel the latest stock-market rout: that booming global growth -- for years the engine of the world's financial markets -- may have trouble pulling U.S. markets out of their swoon this time around.</br></br>Over the summer, when shaky credit markets first sent U.S. stocks lower, strong economic growth in China, India and Europe, together with intervention by the Federal Reserve, reassured investors and sent them back into stocks, pushing U.S. market indexes to new highs.</br></br>Now, big financial companies like Citigroup Inc., Merrill Lynch & Co., Morgan Stanley and Wachovia Corp. are taking multibillion-dollar write-offs linked to the credit-market turmoil. The Fed, meanwhile, is warning that the nation's economic growth is likely to slow. Europe's growth prospects have weakened, and oil has continued to climb toward $100 a barrel.</br></br>Those factors have left investors to wonder whether the Fed's skill in adjusting interest rates and China's economic power will be enough to save U.S. stocks from a steeper selloff.</br></br>Money managers overseeing billions of dollars at hedge funds, pension funds and mutual funds have been hunkering down. Their pullback helped send the Dow Jones Industrial Average down 4.5% in the final three days of last week, to 13042.74 -- the sharpest three-day plunge since 2002.