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Greek debt fears sink Wall Street, more losses eyed

Greek debt fears sink Wall Street, more losses eyed
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First Published: Thu, Jun 16 2011. 08 48 AM IST
Updated: Thu, Jun 16 2011. 08 48 AM IST
New York: US stocks tumbled on Wednesday, driven lower by escalating Greek debt woes, while troubling US data pointed to further losses ahead.
Financials came under fire after Moody’s Investors Service said it may cut the credit ratings of French banks, citing exposure to Greek debt.
US data showed the US economy is facing a troubling mix of higher prices and weak growth.
“Every day that we get another negative macro report -- they can’t keep brushing it under the rug and say we are in a soft patch and it’s only temporary,” said Ken Polcari, managing director at ICAP Equities in New York.
“They tried to play the Greece thing off like it was going to be settled and clearly it’s not, so it’s all coming back to haunt them.”
The day’s losses left the S&P 500 within a stone’s throw of its 200-day moving average of 1,256.82. If that level is breached, losses would be likely to accelerate.
Declines in insurers’ shares outpaced the broader market, with the KBW insurance index down 3 percent. Allstate lost 2.5% to $29.48.
Energy shares also depressed the market as signs of economic weakness fed worries about demand, sending crude to its lowest level since February. Chevron Corp, down 2.2% at $98.41, was the biggest drag on the Dow. The NYSEArca oil index slumped 2.5%.
Profit forecasts from companies, including Nucor Corp, Owens Illinois and Ford, highlighted concerns about the impact that a lethargic economy could have on earnings.
“It’s only adding to the negative mood today, but that also might be a precursor of what is to come,” Polcari said.
The Dow Jones industrial average dropped 178.84 points, or 1.48%, to 11,897.27. The Standard & Poor’s 500 Index lost 22.45 points, or 1.74%, to 1,265.42. The Nasdaq Composite Index slid 47.26 points, or 1.76%, to 2,631.46.
The CBOE Volatility Index jumped 16.8% to 21.32 -- its highest level since 18 March.
The data confirmed views that the economy is getting weaker even as prices are rising.
Those economic worries have been largely behind a 7% slide in the S&P 500 since its near three-year high on 2 May.
The core US Consumer Price Index, which excludes volatile food and energy prices, rose more than expected in May, while the New York Federal Reserve’s Empire State manufacturing index unexpectedly shrank in June, falling below zero for the first time since November.
Even with the selling pressure on Wall Street, Pandora Media Inc managed a successful debut as investors shrugged off profit concerns for the online radio service. Pandora’s stock rose 8.9% to $17.42, but was well off its intraday high of $23.75. At its peak, Pandora’s stock was up as much as 48.4% from its IPO price of $16.
In the insurance industry, Allstate suffered a setback in its lawsuit against Bank of America Corp’s Countrywide unit over toxic mortgage debt, with a Manhattan federal judge moving the dispute to Los Angeles.
Steelmaker Nucor issued a forecast that missed Wall Street’s expectations, and its shares fell 2.2% to $39.80. Shares of Owens Illinois, the world’s largest maker of glass bottles, tumbled 13.5% to $25.54 after the company cut its second-quarter outlook. The stock of No. 2 US automaker Ford lost 2.1% to $13.15.
Volume picked up, with about 7.99 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, slightly above the daily average of 7.58 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2,556 to 478, while on the Nasdaq, decliners beat advancers 2,064 to 542.
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First Published: Thu, Jun 16 2011. 08 48 AM IST
More Topics: Markets | Wall Street | S&P | US stocks | Oil |