The U.S. stock market witnessed moderate drop on Tuesday, following the long Labor Day weekend, which did not produce any positive news on faster economic recovery. In mid-day trading, the Dow Jones industrial average has lost 2.5 percent of its value decreasing by some 277 points, closely following similar development in European markets where the Swiss franc also dropped significantly.
Markets in Europe fueled the plunge in the U.S. stock market after Germany’s DAX closed at 5,188, declining by 1.1 percent with France’s CAC-40 index closing at 2,961, losing 1.3 percent in value. The London Stock Exchange was the only major stock exchange in Europe to report gains with Britain’s FTSE 100 index increasing 0.1 percent to 5,105 points.
Europe’s negative trend hit Asian markets prior to influence the U.S, stock market with Japan’s Nikkei 225 index losing 2.2 percent earlier on Tuesday to close at 8,590.57. Australia’s S&P/ASX 200 stock index closed 1.6 percent lower followed by South Korea’s Kospi, which closed at levels 1.1-percent lower than in the previous trading day.
Lack of positive news on America’s expected economic recovery depresses the markets worldwide while most brokers are looking at the European Central Bank, which this week will decide on basic interest rates in the euro zone. At present, most traders are extremely cautious looking for indications whether the European Central Bank will change the interest rate and how will America’s Federal Reserve System react to such a possible move.