BackWall St tumbles to worst quarter since Lehman fall
Wall St tumbles to worst quarter since Lehman fall
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New York: US stocks staggered to the end of a dismal second quarter on Wednesday in another low volume session as investors found little reason to take on risk after conflicting economic data.
Wednesday’s session ended like many during the quarter, with a late-day sell-off as buying interest waned and investors sold underperforming stocks in the worst quarter since the market meltdown triggered by the collapse of Lehman Brothers.
“Just pushing all the garbage off the side of the ship," Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey, said of the late sell-off.
The S&P 500 fell below the 1,040 level that it had held since February, breaking out to the downside from what chartists call a very bearish “head and shoulders" price pattern and suggesting a major fall could come in the next five months.
To make matters worse, leveraged short ETFs, widely blamed for a portion of Tuesday’s losses, were also cited for the late sell-off as managers piled on bets the market will fall. Those funds shorted the market to keep up with customer demand.
The Dow Jones industrial average dropped 96.28 points, or 0.98%, to 9,774.02. The Standard & Poor’s 500 Index slid 10.53 points, or 1.01%, to 1,030.71. The Nasdaq Composite Index fell 25.94 points, or 1.21%, to 2,109.24.
For the second quarter, the Dow fell 10%, the S&P 500 lost 12% and the Nasdaq dropped 12% as worry about Europe’s sovereign debt and the sustainability of the US economic recovery caused investors to pull back from the most recent closing highs hit in late April. These losses put Wall Street in correction mode as the second quarter ended.
Technology shares were among the hardest hit, with Google Inc off 2.1% at $444.95 and Apple Inc down 1.8% at $251.53.
Data on Wednesday showed Midwest business activity grew slightly more than expected in June, but a private-sector report showed weakness in employment, a critical part of the economic recovery.
The PHLX Oil Services Sector index was among the few bright spots, inching up 0.02%, aided by a 1.8% gain in Baker Hughes Inc to $41.57. The index has fallen 20.3% for the quarter and 22.4% since the BP Plc oil spill.
“If you want to go bottom fishing, you do it in the oil services sector. There is going to be consolidation in that group," said Cliff Draughn, president and chief investment officer of Excelsia Investment Advisors in Savannah, Georgia.
“With this moratorium on offshore drilling, they are a dead business."
Even with the accelerated volume heading into the close, volume was tepid, with about 9.21 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year’s estimated daily average of 9.65 billion.
Declining stocks outnumbered rising ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, about nine stocks fell for every five that rose.
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