The stock market slipped Wednesday as tighter credit in China threatens to extend the shaky economic recovery. Substandard earning results from Morgan Stanley and IBM Corp. weighed on the market heavily in early afternoon trading.
A rise in the dollar also pushed down commodities, adding stress to stocks of energy companies and materials producers.
The Dow Jones Industrial Average lost 200 points, causing investors to put money in government debt and driving down yields.
It had been speculated before today that China’s tightening credit, an effort to cut down on inflation, would negatively effects the world recovery. China has been among the only markets to continue to expand through the second worst depression in 60 years. China is working to avoid runaway lending that could cause the booming economy to experience a major crash.
While the move likely benefits China in the short term, the rest of the global economy will not fare as well, as indicated by the sharp decline in stocks Wednesday.
Approximately five stocks fell for every one that made gains on the New York Stock Exchange Wednesday. The volume reached 457.8 million shares compared with 408.7 million shares traded a day earlier.
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