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Business News/ Money / Wall Street withers late on euro worry; Dow below 10,000
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Wall Street withers late on euro worry; Dow below 10,000

Wall Street withers late on euro worry; Dow below 10,000

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New York: Wall Street staged yet another late-day reversal on Wednesday to end lower as news suggesting China was reassessing its euro-zone debt holdings pushed investors into profit-taking mode.

The Dow closed below 10,000 for the first time since 8 February. The late turnaround in stocks showing investor psyche remains fragile, and investors are inclined to sell strength in this volatile rumor-driven market.

The Financial Times said representatives of China’s State Administration of Foreign Exchange, which manages the reserves under the country’s central bank, has been meeting with foreign bankers in Beijing in recent days to discuss the issue.

“There is still nervousness out there. Yesterday’s turnaround does not mean the market correction is over or that investors are confident about the direction of European policy or the success of European policy," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

The S&P 500 has fallen more than 10% from a closing high on 23 April, putting the benchmark index into correction territory.

Large-cap liquid holdings, including Microsoft Corp and McDonald’s Corp, led the Dow lower as the software giant’s stock dropped 4.1% to $25.01 and the fast-food restaurant operator lost 2.7% to $66.01. At the same time, Apple Inc, which shed 0.5% to $244.11, managed to surpass Microsoft to become the second- largest company in market cap behind Exxon Mobil Corp.

The Dow Jones industrial average dropped 69.30 points, or 0.69%, to 9,974.45. The Standard & Poor’s 500 Index fell 6.08 points, or 0.57%, to 1,067.95. The Nasdaq Composite Index lost 15.07 points, or 0.68%, to 2,195.88.

Swing time on Wall Street

Late-day volatility has been a hallmark during the recent slide on Wall Street, with investors quick to pull the trigger at the slightest provocation. On Tuesday, Wall Street staged a furious rally toward the end of trading to reverse initial declines of more than 3%.

The CBOE Volatility index, or VIX, known as Wall Street’s fear gauge, fell more than 13% earlier in the session when stocks were gaining. By the close, though, the VIX had shifted gears, rising 1.2% to end at its high of 35.02.

“It really seems like the same old thing," said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, Ohio.

“This is the kind of intraday volatility that we will be seeing continuously."

Home sales lift builders’ stocks

Earlier in the session, data showed sales of new US homes hit their highest level in nearly two years in April as buyers rushed to take advantage of an expiring government tax credit.

The Dow Jones US Home Construction index added 0.3%, while the PHLX Housing Sector index edged up 0.2%.

Luxury home builder Toll Brothers Inc gained 0.8% to $20.78 after it said its quarterly loss narrowed from the previous year.

Elsewhere on the economic front, orders for durable goods rose in April to their highest level since September 2008.

Volume was solid, with about 12.44 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq -- well above last year’s estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the New York Stock Exchange by a ration of about 3 to 2, while on the Nasdaq, nearly five stocks rose for every four that fell.

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Published: 27 May 2010, 09:42 AM IST
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