Front-page WSJ ‘R’ word sends shivers to investors

Two in-depth stories on the front page of The Wall Street Journal yesterday contributed to the Dow Jones industrials dropping 237.44 points to 12743.44, much of it in the (now usual) last half hour of trading, observes Grumpy Editor.

Immediately after the market close yesterday, WSJ Online summed up market action with:  “Stocks tumbled as credit-market troubles and recession fears outweighed reports of decent Black Friday sales.”

The two fears cited were amply played on the opening page of yesterday’s WSJ.

Monday morning readers, including already fidgety investors and nervous Wall Street inhabitants, were greeted with the dreaded “R” word on the front page.  Under the headline, “Recession Fears Weigh Heavily on the Markets,” the lead read:  “Battered stock and bond markets are sending an increasingly ominous signal that a U.S. recession could be near.”

The story by Peter A. McKay and Kelly Evans came up with a “but” four paragraphs later.  It pointed out the Fed’s policy makers expect economic growth to pick up, growing 1.8 percent to 2.5 percent next year.

But that didn't matter.  What caught readers’ eyes was the now greatly feared “R” word.

Also giving investors the shakes was an adjoining comprehensive WSJ article by Laurie P. Cohen on the mushrooming problems, triggered by subprime loans, at Citigroup Inc.

Citigroup stock at the close yesterday fell $1 or 3.15 percent to $30.70, its lowest point in almost five years, on heavy volume with 110,745,271 shares traded.