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Wall Street slips on surging oil, Dow Chemical’s dead deal

Wall Street slips on surging oil, Dow Chemical’s dead deal
AFP
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First Published: Tue, Dec 30 2008. 08 55 AM IST
Updated: Tue, Dec 30 2008. 08 55 AM IST
New York: US stocks slid in thin trade, weighed down by surging oil prices rising in response to the Israel-Hamas conflict and Dow Chemical’s loss of a major deal with Kuwait.
The blue-chip Dow Jones Industrial Average fell 31.62 points (0.37%) on Monday to finish at 8,483.93 and the tech-rich Nasdaq dropped 19.92 points (1.30%) to 1,510.32.
The Standard & Poor’s 500 index declined 3.38 points (0.39%) to 869.42 on Monday.
“The stock market traded with broad-based weakness for virtually the entire session, but was able to pare its losses to close well off its session low in another round of light trading volume,” analysts at Briefing.com said.
Investor sentiment was dampened after Kuwait scrapped a $17.4 billion deal with Dow Chemical to create a petrochemicals joint venture.
Analysts said the pullout, announced on Sunday by the Kuwaiti government, could jeopardize the financing of Dow’s agreed $18.8 billion acquisition of Rohm and Haas, a US specialty materials firm.
Kuwait’s decision “places Dow’s purchase of Rohm and Haas in jeopardy. Dow was going to use $9.0 billion in proceeds from the deal with the Kuwaitis to finance its acquisition of Rohm and Haas,” said Fred Dickson, an analyst at DA Davidson & Co.
Dow shares plunged 16.44% to $15.32 and Rohm and Haas tumbled 16.08% to $53.34.
Oil prices breached $40 a barrel on rising unrest in the Middle East, bargain hunting and evidence that Opec members have begun complying with agreed output cuts, traders said.
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First Published: Tue, Dec 30 2008. 08 55 AM IST