Thinking man's rout

22 October 2008 By Richard Beales Follow @richardbeales1

Not so much for the level of the index, but because investors appear motivated by evidence of global economic weakness rather than indiscriminate fear. Even Wachovia s giant loss didn t figure much. It s hardly good news, but any sign of clearer thinking is welcome.

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The Dow Jones Industrial Average of 30 stocks ended October 22 down 514 points at 8,519, for a drop of nearly 750 points over two days.

Disappointing earnings reports from companies including Boeing and AT&T contributed to the decline.

Wachovia, which is due to be sold to Wells Fargo, reported a thirdquarter net loss of $23.7bn. The losses came primarily from $18.8bn of goodwill writedowns in preparation for the sale.

In the wake of trillions of dollars of government initiatives around the world to stabilize banks and ease lending markets, key measures of distress appear to be subsiding. The threemonth Libor benchmark interest rate, for instance, has declined from 4.8% on October 10 to 3.5% on October 22.

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