Dow falls 2% on global stocks sell-off
By Edward Krudy |
May 26, 2010, Wednesday
|
Print Edition
Print Edition
UNITED States stocks tumbled about 2 percent early yesterday, tracking a sell-off in global equities, on worries over Europe's banking sector and as short-term funding costs soared.
European markets were on edge after three-month dollar Libor rates rose to their highest level since July as banks became more wary of lending to European institutions after the Spanish government's rescue of a local bank over the weekend.
The euro fell to an 8 1/2-year low against the yen and neared a four-year trough versus the dollar, while safe-haven US Treasuries rallied.
The Dow Jones industrial average dropped 198 points, or 1.97 percent, to 9,868.57. The Standard & Poor's 500 Index fell 21.2 points, or 1.97 percent, to 1,052.45. The Nasdaq Composite Index lost 48.35 points, or 2.18 percent, to 2,165.2.
"The contagion has really dragged our markets down, I think somewhat excessive from where we are in the crisis. It's become more of a panic," said Marc Pado, market strategist at Cantor Fitzgerald & Co in San Francisco. "The impact on the US economy is getting a bit overplayed."
The S&P 500, a broad gauge of big-cap US stocks, briefly fell below February's intraday bottom of 1,044.5, reaching its lowest point since early November 2009.
The index has lost about 14 percent since late April. Some traders said they were looking for a 20 percent correction, which would mark a technical bear market.
Banks and industrial stocks fell on fears that Europe's debt crisis might derail a global economic recovery. Caterpillar Inc fell 3.4 percent to US$57.20, and Bank of America fell 3 percent to US$14.95.
Chevron Corp shed 2.7 percent to US$71.42 as oil futures followed a commodities sell-off, falling 3 percent to just above US$68 per barrel.
In one bright spot, US consumer confidence rose for the third straight month in May to the highest in more than two years.
European markets were on edge after three-month dollar Libor rates rose to their highest level since July as banks became more wary of lending to European institutions after the Spanish government's rescue of a local bank over the weekend.
The euro fell to an 8 1/2-year low against the yen and neared a four-year trough versus the dollar, while safe-haven US Treasuries rallied.
The Dow Jones industrial average dropped 198 points, or 1.97 percent, to 9,868.57. The Standard & Poor's 500 Index fell 21.2 points, or 1.97 percent, to 1,052.45. The Nasdaq Composite Index lost 48.35 points, or 2.18 percent, to 2,165.2.
"The contagion has really dragged our markets down, I think somewhat excessive from where we are in the crisis. It's become more of a panic," said Marc Pado, market strategist at Cantor Fitzgerald & Co in San Francisco. "The impact on the US economy is getting a bit overplayed."
The S&P 500, a broad gauge of big-cap US stocks, briefly fell below February's intraday bottom of 1,044.5, reaching its lowest point since early November 2009.
The index has lost about 14 percent since late April. Some traders said they were looking for a 20 percent correction, which would mark a technical bear market.
Banks and industrial stocks fell on fears that Europe's debt crisis might derail a global economic recovery. Caterpillar Inc fell 3.4 percent to US$57.20, and Bank of America fell 3 percent to US$14.95.
Chevron Corp shed 2.7 percent to US$71.42 as oil futures followed a commodities sell-off, falling 3 percent to just above US$68 per barrel.
In one bright spot, US consumer confidence rose for the third straight month in May to the highest in more than two years.
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