Wall Street is in retreat over euro worries
US stocks fell yesterday as political turmoil in Europe cast doubts on the Eurozone’s ability to push through measures to end its debt crisis and as Wal-Mart sank following a report it stymied a bribery probe.
The Dow Jones industrial average was down 102.09 points, or 0.78 per cent, at 12,927.17. The Standard & Poor’s 500 Index was down 11.59 points, or 0.84 per cent, at 1,366.94. The Nasdaq Composite Index was down 30 points, or one per cent, at 2,970.45.
The renewed worries came as the Eurozone’s business slump deepened at a far faster pace than expected in April. The Markit PMI fell to a five-month low, confounding forecasts for a rise.
Europe’s debt crisis has been a major headwind for US equities as investors worried it could hurt corporate profits. Bank shares were hit by the concern, including Morgan Stanley, which fell 2.9 per cent, while the KBW bank index fell 0.6 per cent.
“It’s becoming clear the Eurozone is in a recession, and that brings a lot of concerns. To really get out of the debt problem, you need growth, and we haven’t gotten to that step yet,” said Hank Smith, chief investment officer at Haverford Trust.
Wal-Mart Stores slumped 4.7 per cent and was the biggest drag on the Dow after the New York Times reported Wal-Mart officials stymied an internal investigation into bribery allegations at its Mexican unit, Walmart de Mexico.
The sell-off was broad with almost three stocks on the New York Stock Exchange falling for each one that rose, and the economically sensitive S&P materials sector was among the worst performing areas, down 1.4 per cent.
The S&P 500 is still up 8.7 per cent for the year, some way off its year-to-date gain of 12.8 per cent reached earlier this month.
Materials shares followed a fall in commodity prices as copper prices dropped 1.6 percent. Shares in Freeport McMoran Copper & Gold fell 1.1 per cent.
Shares of Apple, which is due to report results today after the bell, briefly fell below their 50-day moving average for the first time in four months. Shares closed down 0.2 per cent at $571.70.
Kellogg Co shares dropped 6.1 per cent after the cereal maker cut its full-year profit view.
Fellow Nasdaq component Hasbro slipped 5.2 per cent on a similarly downbeat set of results, with toy sales slumping and profits falling short of forecasts.