NEW YORK, June 23 — Stocks suffered their worst one-day loss in two months, dropping the S&P 500 back into negative territory for the year yesterday in a broad-based sell-off, as investors reconsidered the health of the economy.
Shares of economically sensitive sectors such as financials, energy and materials led the S&P 500's decline. A sharp drop in US crude oil futures and other commodities hit shares of companies sensitive to those prices, including Exxon Mobil Corp, which lost 3.1 per cent to US$68.84.
Analysts said investors were keen to sell shares that led the market up in its rally since early March. Major averages have largely been trading sideways in recent weeks and many investors have speculated that more obstacles were in store for stocks.
"The recovery is likely to be anaemic by post-war standards," said Hugh Johnson, chief investment officer of Johnson Illington Advisors, in Albany, New York. "The recovery in the economy and earnings is unlikely to be as strong as the rise in stock prices since early March has implied."
Underscoring worries about the economy's outlook, the World Bank said prospects for the global economy remain "unusually uncertain" as it cut 2009 growth forecasts for most economies.
The Dow Jones industrial average dropped 200.72 points, or 2.35 per cent, to end at 8,339.01. The Standard & Poor's 500 Index was down 28.19 points, or 3.06 per cent, at 893.04. The Nasdaq Composite Index was down 61.28 points, or 3.35 per cent, at 1,766.19.
European shares also slid, with the FTSEurofirst 300 index of top European shares hitting its lowest closing level since mid-May.
It was the worst day for the three indexes since April 20 when results from Bank of America reignited concerns about the banking industry.
"Some people are sceptical of how the summer is going to play out and may be taking some profits," said John O'Brien, senior vice-president at MKM Partners LLC in Cleveland.
While lower crude oil prices tend to be a positive for the broader stock market, they often hurt shares of energy companies by giving investors a reason to unload some holdings in that sector.
Crude oil prices fell US$2.62, or almost 4 per cent, to settle at US$66.93 a barrel. Chevron Corp sank 3.4 per cent to US$65.76.
Metal prices also slid, dragging down shares of resource companies. Freeport-McMoRan Copper & Gold Inc dropped 11.3 per cent to US$45.18.
On the Nasdaq, big-cap technology stocks led the decline.
Apple's stock fell 1.5 per cent to US$137.37 even as it said it had sold more than 1 million of its newest iPhone in the first three days of its launch, beating expectations.
Adding to a glum economic outlook, Walgreen Co posted weak quarterly results as US shoppers focused on buying only necessities. The drugstore chain's stock fell 5.7 per cent to US$29.64.
Trading volume was moderate on the New York Stock Exchange, where about 1.40 billion shares changed hands, slightly below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.35 billion shares traded, above last year's daily average of 2.28 billion.
Decliners far outnumbered advancers on the NYSE by 2,703 to 345, while on the Nasdaq, there were 2,264 declining shares and only 415 stocks that rose. — Reuters
Show/Hide comments
Show/Hide comment form
