Wall St tumbles on recovery woes3 min read . Updated: 29 Oct 2009, 09:09 AM IST
Wall St tumbles on recovery woes
Wall St tumbles on recovery woes
New York: US stocks tumbled in a broad sell-off on Wednesday, sending the benchmark S&P 500 lower for a fourth straight day, after weak data on new home sales heightened concerns about the pace of the economic recovery.
Financials, technology, materials and industrial sectors, which underpinned the market’s advance from March, bore the brunt of the slide as investors reassessed their bets.
“The housing data definitely created an additional leg down in the market," said Mike O’Rourke, chief market strategist at institutional brokerage firm BTIG in New York. “A lot of people realize that we’re correcting right now and are being cautious."
The Nasdaq also logged its fourth straight daily drop. Wednesday’s sell-off marked the broader market’s worst day of losses in nearly a month.
The S&P 500 is now up 54.1% from the 12-year closing low of 9 March. At Wednesday’s close, it showed a drop of 5.04% from its post-March closing peak reached a week ago on 19 October.
The Dow Jones industrial average dropped 119.48 points, or 1.21%, to 9,762.69 - its third triple-digit drop in four days. The Standard & Poor’s 500 Index fell 20.78 points, or 1.95%, to 1,042.63. The Nasdaq Composite Index slid 56.48 points, or 2.67%, to 2,059.61.
During the session, both the S&P 500 and the Nasdaq broke below key technical levels as the sell-off accelerated. Both indexes closed below their 50-day moving average for the first time since July, a bearish technical signal.
Additionally, the S&P 500 wiped out its gains for October and is now on the verge of snapping a string of seven months of gains.
The CBOE Volatility Index, Wall Street’s favorite fear gauge, ended up 12.5%, its biggest one-day percentage gain since August.
Among financials, JPMorgan shares fell 2.8% to $42.68, American Express Co dropped 3.6% to $34.67, and the S&P financial index shed 3.2%.
On the technology front, Apple Inc slid 2.5% to $192.40 made the iPod maker the Nasdaq’s top drag.
The Dow Jones US home construction index fell 5.5% - its worst one-day percentage slide since May.
The S&P materials index dropped 3.2 percent.
Among shares of natural resource companies, Dow component and aluminum company Alcoa Inc tumbled nearly 7% to $11.93, while another Dow stock, heavy equipment maker Caterpillar Inc, fell 4% to $54.43. Diversified manufacturer 3M Co shares dropped 2% to $74.46.
Among home builders, Beazer Homes slumped 11.6% to $4.26, while D.R. Horton lost 5.8% to $11.12 and Toll Brothers declined 5.5 percent to $16.95.
Sales of newly built single-family homes unexpectedly fell 3.6%, last month, according to a Commerce Department report. Seperately, data from the Mortgage Bankers Association showed demand for mortgages has fallen for the past three weeks.
The housing data was an additional hurdle for a market already buffetted by uncertainty about the future of the government’s $8,000 home buyer tax credit.
The tax credit for first-time home buyers would be extended until the end of April and expanded to cover repeat buyers under a deal reached by key senators, sources familiar with the plan said on Wednesday.
The housing data underscored the stickiness of the real estate downturn amid a tough job market, tighter lending and sliding home values.
Goldman Sachs cut its forecast for third-quarter gross domestic product, a gauge of all goods and services produced within the US borders, to 2.7% from 3%.
The government will release its first estimate of third-quarter GDP on Thursday. GDP is expected to have grown at an annual rate of 3.3% in the third quarter, according to 77 analysts polled by Reuters.
Volume was heavy on the New York Stock Exchange, with about 1.68 billion shares changing hands, above last year’s estimated daily average of 1.49 billion. On the Nasdaq, about 2.75 billion shares traded, above last year’s daily average of 2.28 billion.
Decliners beat advancers by a ratio of nearly 9 to 1 on the NYSE, while on the Nasdaq, more than five stocks fell for every one that rose.