Page last updated at 00:10 GMT, Saturday, 31 January 2009

Wall Street suffers worst January

New York stock exchange
Traders on Wall Street have endured a torrid start to 2009

Wall Street has suffered its worst January on record as a barrage of bad US economic data continues to shake investors' confidence.

The Dow Jones Index ended the month down 8.8% in what some analysts see as a bad omen for the year ahead.

The broader S&P 500 index fell by 8.6%, also a record fall for January.

The Dow fell 1.82% on the last trading day of the month after official figures showed that US GDP fell sharply in the final quarter of 2008.

World markets also suffered - the MSCI world index closed down 8.6% on the month.

GDP falls

US economic output fell by 3.8% in the last three months of the year, the biggest quarterly decline since 1982.

It was also the second quarterly decline in a row - the first time that has happened since 1991.

And this was just the latest in a long line of bad economic figures.

On Thursday, US Commerce Department figures showed that orders for long-lasting manufactured good from US factories fell for the fifth month in a row.

Figures released at the beginning of the month showed that more people lost their jobs - 2.6 million - in 2008 than in any year since World War II.

A number of the most recognised companies in the US have announced massive job cuts during January.

Aircraft manufacturer Boeing announced on Wednesday that it was cutting 10,000 jobs.

Earlier in the week, construction and mining equipment maker Caterpillar announced it would cut about 20,000 jobs , while carmaker General Motors said 2,000 of its workers would be laid off.

Earlier this month, Microsoft said it would cut more than 5,000 jobs.

Sales slump

Retail sales continue to slump as consumers tighten their belts while the US housing market shows no signs of recovery.

On Thursday, figures showed that sales of new homes in the US dropped by 14.7% in December.

They also showed that for 2008 as a whole, sales fell by 37.8% to 482,000 homes, the weakest results since 1982.

In 2007, 776,000 homes were sold.

Not even the inauguration of President Obama on 20 January led to a sustained rally on Wall Street.

However, the new administration hopes that its $819bn (563bn) economic stimulus package, which passed through the House of Representatives on Thursday and goes to the Senate next week, will mark a turning point in the fight against the economic downturn.

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