Stocks turn sharply lower in late trading
NEW YORK – Stocks took another late-day dive Tuesday after the government said it was starting criminal and civil investigations into the Gulf of Mexico oil spill.The Dow Jones industrial average dropped almost 113 points. Its plunge came shortly before the close and minutes after Attorney General Eric Holder made the announcement. Stocks in energy companies and oil service providers tumbled on the news, and other stocks followed.Holder would not say which companies or individuals might be under investigation. But investors quickly dumped stocks across the energy industry. BP PLC, which operated the rig that caused the spill, fell almost 15 percent. Anadarko Petroleum Corp., which has a stake in the rig that exploded, tumbled nearly 20 percent. Oil services company Halliburton Inc. fell almost 15 percent.Analysts have said the oil spill has been among the many issues nagging at investors in recent weeks. Among the fears in the market is the potential economic hit from the spill. But Tuesday’s announcement raised the possibility that oil companies might have to pay out huge amounts in fines, or see their operations hampered by a government investigation.”Right now it’s headline risk that’s killing us in this market,” said Ken Kamen, president of Mercadien Asset Management in Hamilton, N.J. He said the question marks that pop up when news breaks are making traders think it’s safer to just retreat.”When you just get over third-degree burns you don’t go too near that stove. Last year is not too far out of peoples’ minds,” Kamen said, referring to the market’s slide in 2008 and early 2009.Trading was choppy for much of the day before Holder’s announcement, a sign that investors weren’t sure where to put their money. Investors were juggling worries about Europe’s debt problems with upbeat reports on U.S. manufacturing and construction.The euro slid as low as $1.2112, its lowest level since April 2006, before climbing back to $1.2210. The euro’s moves against other currencies have come to reflect traders’ confidence in Europe’s ability to manage a sovereign debt crisis that started in Greece but has spread to other European nations like Portugal and Spain.Stocks did get some early support from the Commerce Department’s report that construction spending rose by the biggest amount in nearly a decade. The 2.7 percent April gain was the largest since August 2000. Economists forecast spending would be flat. However, homebuilders’ stocks fell although the report showed a big jump in residential building. That blip upward was expected to disappear now that a homebuyers’ tax credit has expired.Meanwhile, the Institute for Supply Management said its manufacturing index fell to 59.7 in May from 60.4 in April. The figure was better than economists’ forecast of 59.The Dow fell 112.61, or 1.1 percent, to 10,024.02. The Standard & Poor’s 500 index fell 18.70, or 1.7 percent, to 1,070.71, while the Nasdaq composite index fell 34.71, or 1.5 percent, to 2,222.33.About four stocks fell for every one that rose on the New York Stock Exchange, where consolidated volume came to 5.3 billion shares compared with 5.1 billion Friday. Volume was light because some traders were away for a long Memorial Day holiday. Light volume can intensify swings in the market.Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, said volatility is likely to continue through the summer in part because some everyday investors who put money into the market before its drop in May are giving up. That leaves the pros who use automated trades to try to profit from moves in stocks.”It just seems like it’s computers versus computers,” he said. “This volatility is probably here to stay, unfortunately, but that doesn’t mean that the market is going to collapse.”Bond prices rose, sending interest rates lower. The yield on the benchmark 10-year Treasury note fell to 3.27 percent from 3.29 percent late Friday.The dollar rose against most other major currencies, while gold rose. Crude oil fell $1.39 to $72.58 per barrel on the New York Mercantile Exchange.BP’s U.S.-listed shares dropped $6.43, or nearly 15 percent, to $36.52. Offshore drilling contractor Transocean Ltd., which owns the well, fell $6.73, or 11.9 percent, to $50.04.Anadarko fell $10.23, or almost 20 percent, to $42.10. Halliburton dropped $3.68, or 14.8 percent, to $21.15.Among consumer stocks, Procter & Gamble Co. rose 7 cents to $61.16 and Kraft Foods Inc. rose 30 cents to $28.90.Homebuilder KB Home fell 75 cents, or 5.2 percent, to $13.73, while Toll Brothers Inc. fell 94 cents, or 4.5 percent, to $20.13.The Russell 2000 index of smaller companies fell 20.65, or 3.1 percent, to 640.96.Overseas, Britain’s FTSE 100 fell 0.5 percent, Germany’s DAX index rose 0.3 percent, and France’s CAC-40 slipped 0.1 percent.Asian markets fell following a report that China’s manufacturing industry slowed last month. Hong Kong’s Hang Seng fell 1.4 percent, while Japan’s Nikkei stock average lost 0.6 percent.
Support Local Journalism
Support Local Journalism
As a Summit Daily News reader, you make our work possible.
Your donation will be used exclusively to support quality, local journalism.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User