US Stocks Drop on Mad Cow News
Jenny Falcon
U.S. stocks tumbled on Wednesday after news of the first potential U.S. case of mad cow disease took its toll on the beef and fast food restaurant industries.
The stock market declined during what is a normally quiet session on the day before the Christmas holiday.
The drop followed the U.S. Department of Agriculture announcement that a cow in the northwestern state of Washington tested positive for the brain-wasting disorder, known as mad cow disease.
Officials, along with the beef and fast food restaurant industries, are trying to reassure Americans that the case was probably an isolated incident. Consumption of beef with mad cow disease can cause death or paralysis for humans.
But shareholders unloaded stocks of restaurant giants that specialize in hamburgers and steak, including McDonalds, Wendy's and Outback Steakhouse, along with the Tyson meat processing company.
Officials in Washington state have already recalled some 7,000 kilograms of beef.
Japan, Mexico, Russia and South Korea, along with several other nations, have halted imports of U.S. beef. But William Dudley, chief economist at the investment firm Goldman Sachs, said future economic fallout and the impact on food prices will depend on a number of factors: "One, what happens to U.S. exports of beef; we know they are going to go down. Two, what happens to the existing herd; how many cows need to be destroyed. And three, what happens to U.S. consumption; how much does it shift away from beef to chicken to pork."
An earlier mad cow crisis rocked the beef industry in Europe, particularly in Britain, where the disease was first diagnosed in the 1980s. But experts say the case is not expected to affect the overall U.S. economy, which, according to recent reports, is growing.
In fact, Mr. Dudley of Goldman Sachs says it could have a positive impact on the chicken, pork and sea food industries. "I think at the current point in time it is really too soon to say that this going to have any big macro impact. The important thing that I would stress is it is not obvious what direction it will have in terms of the implications for food prices. If some things move in the wrong direction you might even see higher food prices but if they move in the right direction you could even see lower [food prices]."
Some companies that specialize in white meat and seafood have already showed gains on the U.S. economy.
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