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Wall Street stocks drop on economic worries

Wall Street stocks drop on economic worries
AFP
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First Published: Thu, May 21 2009. 08 42 AM IST
Updated: Thu, May 21 2009. 08 42 AM IST
New York: Wall Street stocks swung lower on Wednesday as economic worries resurfaced, following a downgrade of the US outlook from the Federal Reserve.
The blue-chip Dow Jones Industrial Average dropped 52.811 points (0.62%) to finish at 8,422.04.
The tech-heavy Nasdaq fell 6.70 points (0.39%) to 1,727.84 and the broad-market Standard & Poor’s 500 index declined 4.66 points (0.51%) to close at 903.47.
“Stocks began drifting lower midway through the session and ultimately closed with a loss as participants turned against financials,” said Briefing.com analysts in a client note.
Weighing on sentiment was the afternoon release of the Federal Reserve minutes of an 28-29 April meeting that revealed the central bank policymakers had downgraded growth forecasts.
The Federal Open Market Committee minutes, however, showed policymakers are seeing “tentative evidence” the US economy is emerging from recession and could show modest growth in the second half of the year.
Jon Ogg at 24/7WallSt.com said the markets appeared to be disappointed that the Fed had not offered some hint that it would lift interest rates from the base level of zero to 0.25 percent.
Financial stocks, which had posted gains earlier, took a beating. The S&P bank index dropped 3.29%.
Citigroup slid 2.12%, JPMorgan Chase fell 3.52%, Wells Fargo slumped 3.89% and Goldman Sachs shed 3.24%.
Bank of America bucked the downturn. Up more than 7% after saying it had raised roughly $13.47 billion in a share issue, the government-rescued banking giant closed 2.13% higher.
Treasury Secretary Timothy Geithner told a Senate panel that a public-private investment program would begin buying up tainted assets clogging the US banking system within the next six weeks.
Elsewhere, General Motors surged 14.17% to. GM Europe confirmed that Italy’s Fiat, Canadian auto parts maker Magna and the RHJ International holding company had made offers to buy its German Opel unit.
After GM, the second-biggest gainer on the blue-chip Dow index was fast-food giant McDonald’s, leaping 4.42% after a Deutsche Bank recommendation.
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First Published: Thu, May 21 2009. 08 42 AM IST
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