European meeting fails to ease investors' worries

Dow Jones:11,406.01 (–76.89) S&P 500:1,192.73 (–11.76) Nasdaq:2,523.45 (–31.75)

US STOCKS fell yesterday after three days of gains when a meeting between the heads of France and Germany failed to quell fears about the euro zone leaders’ ability to contain the region’s sovereign debt woes.

Stocks were unable to rally despite positive US earnings and Fitch Ratings’ decision to keep the AAA credit rating for the US.

German chancellor Angela Merkel and French president Nicolas Sarkozy detailed plans for closer euro zone integration but they did not include boosting the size of the euro zone’s rescue fund or the sale of eurobonds.

“The market wanted to see at least some forward movement, something concrete coming out of the meeting that would’ve been supportive to what’s been dragging the market lower,” said Marc Pado, US market strategist at Cantor Fitzgerald in San Francisco.

Shares of financials, seen as vulnerable to a European fiscal crisis, added to their decline and were the worst-performing sector in the SP 500.

The S&P financial index was down 1.9 per cent.

Ms Merkel and Mr Sarkozy said they would propose a tax on financial transactions, which hurt shares of exchange operators. Shares of NYSE Euronext fell 8.4 per cent to $26.54, making it the worst performer in the S&P 500.

Shares of retailers Wal-Mart Stores and Home Depot both rose after the industry bellwethers exceeded analysts’ expectations for quarterly numbers.

Dell’s shares dropped 4.9 per cent in after-hours trading after the company reported revenue slightly below analysts’ expectations and said sales in the present quarter would be flat.

The Dow Jones industrial average dropped 76.89 points, or 0.67 per cent, at 11,406.01, while the Standard Poor’s 500 index declined 11.76 points, or 0.97 per cent, at 1,192.73.

The Nasdaq Composite Index fell 31.75 points, or 1.24 per cent, at 2,523.45.

Wal-Mart shares advanced 3.9 per cent to $51.92 after the company said US same-store sales turned positive in July.

Home Depot shares gained 5.2 per cent to $33.12 after the company raised its fiscal-year profit forecast for the second time in three months. – (Reuters)