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US stocks slump as debts hit limit

US stocks slump as debts hit limit
AFP
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First Published: Tue, May 17 2011. 01 10 PM IST
Updated: Tue, May 17 2011. 01 10 PM IST
New York: Slumping tech stocks pulled US markets down Monday as the country struck its limit on borrowing with no increase in sight, putting more pressure on the government to slash spending.
The Dow Jones Industrial Average closed down 47.38 points (0.38%) at 12,548.37, with technology and consumer stocks leading the way down.
The broader S&P 500 dropped 8.30 (0.62%) to 1,329.47, while the tech-heavy Nasdaq Composite fell 46.16 (1.63%) to 2,782.31.
Tech stocks helped push the market down, with Apple losing 2.1%, Microsoft 1.8%, Cisco 1.7%, Yahoo dropping 4.5% on its troubles with Chinese partner Alibaba, Oracle losing 2.9%, and Nvidia down 3.1%.
Investors were hesitant but found no clear signals from volatile dollar, oil and gold trading which have guided sentiment for the past two weeks, analysts said.
“Investors were asking themselves whether they needed to increase or reduce their risk positions,” said Gregori Volokhine of Meeschaert Capital Markets.
“That’s why there was no real trend” in the market.
Earlier Asian and European stocks were also mostly down, with the arrest on sexual assault charges of International Monetary Fund managing director Dominique Strauss-Kahn, who spearheaded the IMF’s role in Europe’s bailouts.
The arrest heightened worries about how the Greek debt crisis will be handled, though it did not prevent the Fund from signing on to a three-year €78 billion ($11 billion) EU-IMF bailout of Portugal Monday.
Also weighing on sentiment were poor earnings from Lowe’s Cos., the home improvement big-box retailer. Lowe’s shares fell 3.6% after it reported a worse-than-expected 5.7% fall in first-quarter earnings and reduced its full-year projection.
Also hovering over the market was the United States hitting its statutory $14.29 trillion debt ceiling, forcing the Treasury to take short-term measures to halt the net issue of new debt while politicians haggle over a broader deal on addressing the country’s huge budget deficit.
Bond prices rose. The yield on the 10-year Treasury note dropped to 3.15% compare to 3.19% late Friday, while that on the 30-year bond fell to 4.28% from 4.33%.
Bond yields and prices move in opposite directions.
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First Published: Tue, May 17 2011. 01 10 PM IST
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