Wall Street dropped for a third day on Friday on worries about the Italian banking sector and Greece's debt crisis, but the S&P 500 managed to hold its 200-day moving average in a sign buyers still see value. The Dow industrials and the S&P 500 fell for their seventh week in the last eight. The benchmark S&P 500 is down 7 percent from its 2011 closing high at the end of April.
--- Trading briefly halted in some Italian banks' shares
--- S&P 500, Dow fall for 7th week in last eight
Investors are fearful that Greece's government may fail to pass an austerity plan next week, which could force a default on its debt repayments. The government faces an electorate vehemently opposed to the austerity measures. "They (politicians) may not believe that financial markets are as sensitive to their decisions as they actually are, and there is a worry that somewhere along the line, some political vote goes against the market," said Nicholas Colas, chief market strategist of the ConvergEx Group in New York.
The S&P 500 remained within striking distance of its 200-day moving average - a line that has been tested twice in recent trading and has so far acted as a springboard for stocks. The level was at 1,263.47. "Every time you test a resistance or support level, you make it weaker," Colas said. "It's almost like a piece of metal. Every time you hit it, it grows more fragile and that's why people are really worried the third or fourth time."
Problems in the eurozone appeared to intensify as shares of Italian banks UniCredit SpA and Intesa Sanpaolo fell sharply on concerns about their capital positions. Trading in their shares was briefly suspended. The CBOE Volatility Index or VIX, Wall Street's barometer of investor anxiety, rose 9.4 percent to 21.10. Some analysts say fear needs to rise further before the market reaches a bottom.
The Dow Jones industrial average dropped 115.42 points, or 0.96 percent, to 11,934.58 at the close. The Standard & Poor's 500 Index fell 15.05 points, or 1.17 percent, to 1,268.45. The Nasdaq Composite Index lost 33.86 points, or 1.26 percent, to 2,652.89. For the week, the Dow fell 0.58 percent and the S&P 500 shed 0.24 percent, while the Nasdaq gained 1.39 percent.
Bank stocks fell on concerns about the economic outlook. The KBW Banks Index lost 1 percent and the S&P Financial Sector Index shed 0.7 percent. The sector has been the worst-performing this year, falling around 8 percent. On Thursday, the market welcomed Greece's agreement to a five-year austerity plan.
The euro declined against the dollar for a third straight session on worries Greece's parliament might not pass austerity measures needed for the country to secure more bailout funds. In the latest economic data, new orders for long-lasting US manufactured products, known as durable goods, increased 1.9 percent in May after dropping 2.7 percent in April as bookings for transportation equipment rebounded strongly. Oracle Corp fell 4.1 percent to $31.14 a day after the world's No 3 software maker posted disappointing results, especially in hardware sales. Oracle's results sparked concerns about a bigger slowdown in technology spending.
Micron Technology Inc tumbled 14.5 percent to $7.21 after the memory chipmaker recorded results below expectations late Thursday. An index of semiconductor stocks lost 2.5 percent. About 9.26 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq - well above the daily average so far this year of around 7.57 billion. Analysts said Friday's volume was much higher than average due in part to the re-balancing of the Russell 2000 Index. Declining stocks outnumbered advancing ones on the New York Stock Exchange by a ratio of 19 to 11. On the Nasdaq, about three stocks fell for every two that rose.
Comments
Comments are closed.