Dow Jones: 11,905.59 (–190.57) Nasdaq: 2,639.61 (–46.59) S&P 500: 1,236.91 (–20.90)US STOCKS tumbled yesterday, as Fitch Ratings said further contagion from Europe's debt crisis will pose a risk to American banks and amid concern higher oil prices will hamper economic growth.
The Dow Jones Industrial Average retreated 190.57 points, or 1.6 per cent, to 11,905.59.
“The economic data has been getting better, but I don’t think the market should look at that thinking all is fine,” Wasif Latif, vice president of equity investments at USAA Investment Management in San Antonio, said.
“There’s a probability that Europe goes back into recession. That can put pressure on the rest of the world . . . When oil goes up, consumers feel that in their pocketbooks,” he said.
Stocks extended losses after Fitch said it “believes that unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the US banking industry could worsen”.
Equities also fell after Bank of England governor Mervyn King said Britain faces a “markedly weaker” outlook for the economy as Europe’s crisis threatens global growth.
Benchmark gauges briefly recovered as Boston Federal Reserve president Eric Rosengren said Europe’s debt crisis may warrant co-ordinated action by the Fed and the European Central Bank “In Europe you have a political problem that requires a political solution, and that leaves the ECB and the global counterparts as the remaining credible actors,
Stephen Wood, who helps oversee about $163 billion as the New York-based chief market strategist for Russell Investments, said in a telephone interview. “You’ve got these storm clouds still in Europe even as on this side of the Atlantic the clouds are beginning to part.”
Among declining stocks, computer maker Dell, missed quarterly revenue estimates and its shares fell 3.2 per cent to $15.13.
Rambus shares tumbled 60.6 per cent to $7.11 after the company lost an antitrust trial against Micron Technology.
Shares of Abercrombie Fitch slumped 13.6 per cent to $48.10 after the teen clothing retailer’s quarterly profit missed estimates by a large margin. – (Bloomberg/Reuters)
