Wall Street sell-off on recovery fears
WALL Street ended a four-day rally with its worst session since August yesterday and could suffer more losses in coming days as investors faced more signs the economic recovery is fading.
All 10 Standard & Poor’s sectors ended more than one per cent lower and all 30 stocks in the Dow industrials fell. Banks were the biggest decliners as the economic reports painted a glum picture for jobs and manufacturing.
The recent four-day winning streak had some investors pointing to resilience in the market, but yesterday decline took the S&P through its 50-day moving average, leaving the market vulnerable to more losses.
The Dow Jones industrial average was down 279.42 points, or 2.22 per cent, at 12,290.37. The Standard & Poor’s 500 Index was down 30.66 points, or 2.28 per cent, at 1,314.54. The Nasdaq Composite Index was down 66.11 points, or 2.33 per cent, at 2,769.19.
The S&P financial sector slumped 3.5 per cent with JP Morgan Chase and Bank of America among the biggest drags. JP Morgan fell 3.4 per cent while Bank of America lost 4.3 per cent. A number of hedge funds are selling the banking sector.
According to ADP, US private employers added a scant 38,000 jobs in May, the lowest
since September 2010 and far below what had been expected. Several banks cut their forecasts for Friday’s non-farm payroll report from the Labor Department.
Adding to the gloomy data was the Institute for Supply Management’s index, a measure of manufacturing activity that suffered its biggest fall since September 2009 during May.
Automakers tumbled after reporting slightly lower car sales in May as economic weakness and high gas prices pushed consumers to delay purchases. General Motors lost five per cent and Ford Motor sank 4.6 per cent.
Almost five stocks fell for every one that rose on the New York Stock Exchange while on the Nasdaq about 81 per cent of stocks finished in the negative.
About 8.36bn shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly under last year’s daily average of 8.47bn. Recently, days of steep declines have corresponded with sharp upticks in trading volume.