US stocks at 11-year low

US stocks extended their losses to a fifth straight day on Tuesday as the Dow Jones Industrial Average fell 37.27, or 0.6 per cent, to 6726.02, its lowest close since April 21, 1997.

Broader stock indicators also fell. The S&P 500 index slid 4.49, or 0.6 per cent, to 696.33. The Nasdaq composite index fell a modest 1.84, or 0.1 per cent, to 1321.01, and the Russell 2000 index of smaller companies fell 6.79, or 1.9 per cent, to 361.01.

But the losses were modest compared with Monday's bloodbath, when the Dow Jones industrial average tumbled 300 points and both the Dow and the S&P 500 index registered their lowest finishes in more than a decade.

The mounting losses have taken the S&P 500 and the Dow to new lows.

The S&P 500 is now down almost 56 per cent from its bull market high, which was reached in late 2007. The Dow is down roughly 53 per cent from its record of 14,164.53 set in October 2007.

Consolidated volume on the New York Stock Exchange came to 7.41 billion shares compared with 7.71 billion shares traded on Monday.
Investors remain fearful of buying into a market that has dashed their hopes that it had hit bottom.

US president Barack Obama on Tuesday likened the stock market's behaviour to the daily tracking polls used during campaigns. He said tracking Wall Street's 'fits and starts' too closely could lead to bad long-term policy.

''The economy's performance in the last quarter of 2008 was the worst in over 25 years. And frankly the first quarter of this year holds out little promise for better returns,'' Obama said in a speech.

Billionaire investor Warren Buffett in his annual Berkshire Hathaway report warns investors saying that the recession may continue longer than many of them have been expecting.

Buffett reported that Berkshire Hathaway decreased in value by $11.5 billion in 2008.

''Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome after effects,'' he wrote in the report.

He also warned that for industries and others who have become dependent on federal bailout funding, ''weaning these industries from the public teat will be a political challenge.''

Investors are also wary about Buffett's prediction that the economy will be in 'shambles' throughout 2009 and 'probably well beyond'. Analysts have generally predicted an economic recovery will start late this year.

Treasury secretary Timothy Geithner stood firmly behind his forecast for recovery in 2011, at which time the US government will need to reduce budget deficits once the stimulative spending spree does its job.

Government bonds were mixed on Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.89 per cent from 2.87 per cent late Monday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.26 per cent from 0.27 per cent from Monday.

The dollar gained against the yen in choppy trading, and the euro fell 0.17 per cent at $1.2562, while gold prices fell to a three-week low.

Oil prices rose nearly 4 per cent, after a decline of about 10 per cent on Monday, on expectations the Organisation of Petroleum Exporting Countries (Opec) will cut production again. US crude settled at $41.65 a barrel, up $1.50, though it fell from highs above $147 a barrel in July 2008. London Brent crude rose $1.46 to $43.70 a barrel.

In other global markets, Britain's FTSE 100 fell 3.14 per cent, Germany's DAX index fell 0.52 per cent, and France's CAC-40 fell 1.04 per cent. Japan's Nikkei stock average slipped 0.69 per cent.