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Wall St falls, succumbing to Europe fears

Jun 14 2012 07:46 Reuters

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New York - Wall Street ended lower on Wednesday as fears ahead of the weekend elections in Greece finally drove down a market that had been treading water through most of the day.

Up to €800m have been pulled out of Greek banks daily ahead of the cliffhanger election on Sunday, which many fear will result in Greece leaving the eurozone. If that happens, investors fear other peripheral nations may also have to exit.

The eurozone's cloudy future has made investors inclined to quickly reverse positions. On Wednesday, they pounded shares in financial, energy and materials sectors into the close.

Volume surged after three weak sessions. About 7.1 billion share trade on the NYSE, Amex and Nasdaq, slightly above the 20-day moving average.

There's a "lack of details or specifics coming out of Europe, and that creates more of a vicious cycle," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston. "The euro has been a concern every single day."

Also weighing on sentiment, the government reported US retail sales fell in May to their worst level in two years, the latest data to point to sluggish US growth after a weaker-than-expected US jobs report in May sparked widespread fears of a slowdown. The S&P Retail Index lost 1.5%.

There was a defensive tilt to trading for much of the day as gains in sectors such as healthcare and telecoms managed for a time to offset declines in cyclical areas. Shares in telecom provider AT&T hit a 52-week high at $35.06, before closing unchanged at $34.98. The telecom sector ticked up 0.1%.

Shares of JPMorgan Chase & Co were a standout, rising 1.6% as the bank's chief executive, Jamie Dimon, defended the portfolio behind JPMorgan's recent multibillion-dollar trading loss, telling lawmakers it was a genuine hedge that would make the firm a lot of money if a credit crisis hit.

In the overall market, the Dow Jones industrial average fell 77.42 points, at 12,496.38. The Standard & Poor's 500 Index lost 9.30 points, at 1,314.88. The Nasdaq Composite Index dropped 24.46 points, at 2,818.61.

The S&P 500 had moved more than 1% in opposite directions on the previous two trading days, which were largely dictated by the events in the eurozone.

On Tuesday the index bounced after falling toward the 1,300 level, a psychological milestone that some traders are using to trade against as index levels assume more importance given the lack of a clear outlook.

Investors have pushed Spain's 10-year borrowing costs to their highest level since the launch of the euro in 1999, adding to uncertainty over the plan to bail out the country's struggling banks.

In company news, Dell, the No. 2 US PC maker, said it aims to raise its target on dividends and share buybacks to 20% to 35%  of free cash flow, saying its corporate software and services business is on track to grow by an average of 10% annually until 2016. Its shares advanced 2.5% to $12.27.

An influential government adviser in China was quoted as saying the country's economic growth could fall below 7% in the second quarter if weak activity persists in June.

Investors have been looking to China's relatively robust expansion to pick up the slack from Europe, especially demand for commodities.

Also on Wednesday, shares of Celgene Corp rose 0.8% to $63.59 after the biotechnology company authorised a stock buyback programme of $2.5bn.

wall street  |  markets
NEXT ON FIN24X

European shares near peaks

2013-05-17 13:16

 
 
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