New York: US stocks slipped and government debt prices fell on Wednesday as investors worried about the cost and effectiveness of President Obama’s new $275 billionn plan to try to shore up the slumping US housing market.
More dismal economic data bolstered the safe-haven bid for gold and the US dollar, while US oil prices fell below $35 a barrel on renewed concerns about rising crude inventories and falling demand.
Data showing US housing starts and building permits dropped to record lows in January weighed on markets, as builders shelved construction plans to try to clear a glut of unsold houses caused by the slump in demand.
Further darkening the picture for an economy mired in a 13-month-old recession was US industrial output, which shrank more than expected in January. The measure of manufacturing capacity being tapped hit its lowest level on record.
The news came as US President Barack Obama pledged up to $275 billion to help stem home foreclosures, the latest step in his multi-pronged efforts to turn around the US downturn.
Analysts presume the plan will further expand government borrowing, which already is expected to reach $2 trillion this year alone, and double US financial support for mortgage finance companies Fannie Mae and Freddie Mac.
US Treasury bond prices retreated and Wall Street ended mostly lower after a choppy session. Shares in Europe closed down for a third straight session as Obama’s plan was met with skepticism and fears of a deepening recession.
Investors also were uncertain about how the plan would work. A lack of specifics smacked of a widely panned bank rescue plan unveiled last week by US Treasury Secretary Timothy Geithner.
The Dow closed slightly higher after a see-saw session but the broader S&P 500 and Nasdaq indexes closed down. On the Big Board, 324 stocks of 3,161 traded hit new 52-week lows.
The Dow Jones industrial average rose 3.03 points, or 0.04%, at 7,555.63. The Standard & Poor’s 500 Index fell 0.75 points, or 0.10%, at 788.42. The Nasdaq Composite Indexshed 2.69 points, or 0.18%, at 1,467.97.
The pan-European FTSEurofirst 300 index of top shares fell 0.3% at 763.36 points.
The dollar stormed above ¥93 yen for the first time in six weeks amid growing worries about a steep contraction in Japan. Against the euro, the dollar neared a three-month high on concerns a deep recession in Eastern Europe would damage to western European banks.
The dollar rose against a basket of major currencies, with the US Dollar Index up 0.34% at 88.063. Against the yen, the dollar gained 1.60% at 93.83.
The euro fell 0.36% at $1.2543.
A report from the American Petroleum Institute to be released Wednesday afternoon is expected to show US crude stockpiles rose last week by 3 million barrels to the highest level since May 1998.