NEW YORK —Stock markets around the world plummeted Friday and oil prices plunged to their lowest in more than a year on growing fears that governments, central banks and finance ministers could be powerless to stop a global downturn that will slam profits and lead to global job losses.
Crude prices have now fallen 56 percent from the highs reached in July, and more than $41 per barrel in just the last month.
Gathered in Vienna, Austria, on Friday to stanch plunging oil prices, OPEC announced it would slash oil production by 1.5 million barrels a day.
Oil prices plunged more than 5 percent.
Investors paid little heed to OPEC attempts to limit supply, instead focusing on global demand as financial markets spiraled downward in Asia, Europe and then the United States.
Light, sweet crude for December delivery fell $3.69 to settle at $64.15 a barrel on the New York Mercantile Exchange. Prices had fallen as low as $62.85 earlier in the day.
The continuing decline in oil prices, even in the face of OPEC production cuts, only cemented bearish sentiment on the oil market.
"All OPEC confirmed for the market is how weak demand is," oil trader and analyst Stephen Schork said.
Supporting that view was a report released Friday by the U.S. Department of Transportation that showed the largest monthly decline in miles driven in 66 years.
In the month after gas prices peaked at $4.11 per gallon, Americans drove 5.6 percent less, or 15 billion fewer miles, in August 2008 compared with August 2007 — the biggest single monthly decline since the data was first collected regularly in 1942.
U.S.
stocks narrowed their losses as they began the last hour of trading. The Dow Jones industrial average, which dropped more than 420 points in early afternoon trading, was down 170 points later in the afternoon. Before the open of New York trading, Dow futures had dropped 550 points, triggering a temporary trading halt in stock futures contracts in an effort to slow the decline.
"This is beyond volatile: It is chaotic," Carl Weinberg, chief economist at High Frequency Economics wrote in note to clients. "This is the kind of day when the central banks step into the market with an 'unexpected' interest rate move to calm things down."
The dollar plunged below 93 yen, a 13-year low. Gold fell as low as $681 an ounce, its lowest since January last year, before turning higher.
It was a black Friday overseas. Japan's Nikkei stock average dropped 9.6 percent. Germany's benchmark DAX index plunged as much as 10.8 percent, France's CAC40 slid 10 percent and Britain's FTSE 100 shed 8.7 percent. Stocks in Hong Kong fell 8.3 percent.
Russian stocks fell sharply; the two main exchanges shut early and won't resume trading until Tuesday.
"We are getting used to wild swings in the markets, but today's moves verge on the bizarre," said Julian Jessop, chief international economist at Capital Economics.
The only good news was the 5.5 percent increase in September existing home sales. Median home prices, however, dropped to $191,600, down 9 percent from a year ago.
The U.K.'s third quarter gross domestic product fell 0.5 percent, the first decline in 16 years, put the country on the brink of recession. Shares of Japan's Sony sank more than 14 percent when it slashed its earnings forecast for the fiscal year. In Germany, Daimler's stock dropped 11.4 percent in morning trading; it reported lower third-quarter earnings and abandoned its 2008 profit and revenue guidance.
Emerging market economies and currencies are coming under extreme pressure. Investors are pulling money out of countries in Eastern Europe, Latin America and Asia on fears vulnerable countries will not only be hit hard by the financial crisis but may also default on debt.
Hong Kong's Hang Seng index fell 8.3 percent and markets in India, Thailand, Indonesia and the Philippines were also down sharply.
Brazilian stocks slumped for the fourth straight day, with the Ibovespa index down more than 8 percent in early afternoon. Mexico's benchmark index was down 5 percent.
"Periods of panic punctuated by occasional calm appears to be the manner of things for now," said Daragh Maher, a strategist at Calyon Corporate and Investment Bank in London.
Over the past few weeks, governments have taken unprecedented steps to thaw frozen credit markets and avert the downturn. While there are signs credit markets are beginning to thaw — rates banks charge each other for short-term loans have been falling — the outlook from companies reporting earnings is almost universally cautious.
That means companies will be reluctant to buy new equipment or hire new workers. U.S. unemployment claims, already well into recession territory, are rising even faster than expected. Economists warn the worst is yet to come.
On Thursday, the government said new applications for unemployment insurance rose 15,000 last week to a seasonally adjusted 478,000, above analysts' estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession.
Goldman Sachs, Chrysler and Xerox all announced they were cutting workers by the thousands, adding to the woes of an economy beset by tighter credit and wobbly banks. Chrysler said it would cut about 5,000 of its 18,500 white-collar work force.
PNC Financial Services said it is acquiring National City bank for $5.8 billion and planned to receive $7.7 billion in capital from the federal government as part of its $700 billion financial rescue plan.
The Commerce Department will release its first estimate of third-quarter economic performance Oct. 30, and Wall Street analysts project it will show the economy contracted by 0.5 percent, according to Thomson/IFR.
Many economists expect the decline to continue into the current quarter and the first three months of 2009, if not longer. The classic definition of a recession is at least two consecutive quarters of negative growth.
Associated Press writers Stevenson Jacobs in New York, Louis Watt and Carlo Piovano in London and Martin Crutsinger, Christopher S. Rugaber and Marcy Gordon in Washington contributed to this report.