Wall St roiled by Citi, Greece

New York - Wall Street stocks tumbled on Thursday with sentiment hurt by a lackluster response to Citigroup's share offering that prompted the US government to delay the sale of its stake in the banking giant.

The second downgrade of Greece's sovereign credit rating in a month and lingering jitters about the US Federal Reserve's exit strategy from its stimulus effort also weighed on the markets.

The Dow Jones Industrial Average slid 130.97 points (1.25 percent) to 10 310.15 and the Nasdaq shed 25.20 points (1.14 percent) to 2 181.71 at the closing bell.

The Standard & Poor's 500 index declined 12.55 points (1.13 percent) to a preliminary close of 1 096.63.

"An S&P downgrade of Greece's sovereign debt and Citigroup's struggle to raise capital are two developments contributing to the market's angst," said Patrick O'Hare at Briefing.com.

Citi came under heavy selling pressure after announcing that the US government was delaying the sale of its stake as the company faced weak demand for a share offering.

Global markets were struggling as well on concerns about sovereign debt levels after Standard & Poor's lowered Greece's long-term credit rating and warned of additional cuts unless the government managed to get its finances in order.

Markets also digested Wednesday's action by the Federal Reserve, which extended its record-low interest rates and reaffirmed this policy would remain in place "for an extended period" to support a still-precarious economic recovery.

The Fed also said it would terminate many emergency lending programs in 2010 as scheduled, causing some consternation.

"The subtle message in the Fed's directive is that, even though the fed funds target rate isn't changing soon, money isn't going to be as easily accessible as it once was," O'Hare added.

- AFP