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Wednesday, February 26, 2020

Wall Street falls on euro zone debt fears; banks drag

Wall Street stocks tumbled for a third session on rising concerns about the euro zone’s debt crisis and the outlook for the global economy.

Written by Reuters | New York | Published: September 7, 2011 1:53:45 am

Wall Street stocks tumbled for a third session on Tuesday on rising concerns about the euro zone’s debt crisis and the outlook for the global economy.

Major US banks were among the biggest decliners,with the KBW Bank index off nearly 2 per cent on fears that lenders face a growing list of mortgage-related lawsuits. Late on Friday,the Federal Housing Finance Agency sued 17 large US banks over subprime mortgage-backed bonds.

Nervous investors channeled cash into less risky assets as doubts resurfaced over the political will of Italy and Greece to push through tough budget and debt measures demanded by other euro zone members,while Germany hardened its stand against giving them more aid.

Declines on Wall Street followed a 4 per cent slide in European equities on Monday on renewed worries about the euro zone’s debt crisis,when US markets were closed for the Labor Day holiday.

We have got a shot at trading the S&P under 1,100 again,said Nick Kalivas,an equity index analyst at MF Global in Chicago. I don’t sense that people are really going to defend the market until something like that occurs.

The S&P 500 hit a 2011 low of 1,101 on Aug. 9.

The Dow Jones industrial average dropped 198.71 points,or 1.77 per cent,to 11,041.55. The Standard & Poor’s 500 Index fell 20.91 points,or 1.78 per cent,to 1,153.06. The Nasdaq Composite Index lost 39.43 points,or 1.59 per cent,to 2,440.90.

Traders are monitoring lows set by major global indexes during the selloff in the first half of August. So far,only Germany’s DAX,down nearly 25 per cent this year,and Japan’s Nikkei have fallen below those levels. European shares extended losses on Tuesday,falling to their lowest close in more than two years on worries the euro zone debt crisis was deteriorating,while the PHLX Europe sector index slumped 4.2 per cent. US-listed shares of Credit Suisse fell 13.4 per cent to $23.72. The Financial Times reported several big US banks,in talks with state officials on settling claims of improper mortgage practices,were offered a deal to limit legal liability in return for a multibillion-dollar payment.

Several brokerages including Nomura cut their price targets on big lenders.

Bank of America Corp lost 3.6 per cent to $7.00 and JPMorgan Chase & Co fell 3.8 per cent to $33.33.

Among gainers,Sunoco Inc rose 5 per cent to $37.91 after the energy company said it plans to exit its refining business and focus on its logistics operations.

European and US stocks briefly pared losses after data showed the pace of expansion in the US services sector unexpectedly accelerated in August. That followed data on Friday that showed zero net employment growth,stoking recession concerns.

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