Stocks tumble, recession looms

POSTED: Thursday, August 18, 2011 - 3:20pm

UPDATED: Thursday, August 18, 2011 - 5:24pm

Stocks tumbled once again on Wall Street and worldwide, driven by Europe's debt problems and new data the U.S. economy is slowing in key areas.

Sales for existing homes fell for the third time in four months.

Orders for manufacturing in the mid-Atlantic region dropped into negative territory, adding to concerns the U.S. is headed for another recession.

Also, jobless claims were higher than expected last week.

The weak job market is keeping pressure on the housing market. Interest rates for 30-year fixed mortgages are at their lowest in three decades, but buyers are facing other hurdles with lenders.

"Refinancing has soared in these recent weeks,” stated economist Diane Swonk. “They can't even process everything that is coming in because they don't have the people to do that on the other side - a lot of cancelations, a lot of people not getting through. As a result, they are renting homes instead of buying them.”

Confidence is also taking a hit, as Americans are once again tightening their belts and investors looking for a safe haven.

Gold prices have hit record highs, trading above $1,800 an ounce. But analysts say investors need to be careful.

All of these factors make it harder to gauge what the markets and economy will do next.

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