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Materials lead Wall Street slide on euro-debt woes
Traders work on the floor of the New York Stock Exchange, November 23, 2010.
Credit: Reuters/Brendan McDermid
NEW YORK |
NEW YORK (Reuters) - Commodity-related shares led U.S. stocks lower on Friday in a shortened post-holiday session as investors unloaded risky assets on worries that euro-zone debt problems may spread.
Consumer stocks were also a major focus as Black Friday, often the biggest shopping day of the year, began what is expected to be the strongest holiday shopping season in three years.
While strong sales on Black Friday, when many retailers move into the black, could give a boost to stocks next week, Europe's shaky finances may temper any gains. <.N/O>
The U.S. dollar rallied while the euro slid to a new two-month low amid fears that Portugal and Spain could follow Ireland in needing bailouts to shore up their economies.
The S&P materials index .GSPM dropped 1.2 percent as key base metals prices fell, pressured by the advancing greenback and after the Shanghai Futures Exchange raised margin requirements, prompting liquidation of speculative positions.
Freeport McMoRan Copper & Gold (FCX.N) dropped 2.6 percent to $98.07.
"There are concerns from euro land, and sharp selloffs in large European banks kind of set the tone for the day," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
The S&P financial index .GSPF fell 1.1 percent, with Bank of America (BAC.N) down 1.2 percent at $11.14.
The Dow Jones industrial average .DJI dropped 95.28 points, or 0.85 percent, to end at 11,092. The Standard & Poor's 500 .SPX slipped 8.95 points, or 0.75 percent, to 1,189.40. The Nasdaq Composite .IXIC lost 8.56 points, or 0.34 percent, to 2,534.56.
For the week, the Dow dropped 1 percent and the S&P 500 fell 0.86 percent, but the Nasdaq Composite gained 0.65 percent. U.S. markets were closed on Thursday for Thanksgiving Day.
Investors were further rattled Friday after China warned against military acts near its coastline ahead of U.S.-South Korean naval exercises. Earlier, North Korea had said those naval drills risked pushing the region toward war. The North shelled a South Korean island on Tuesday.
Retail shares were sluggish despite the upbeat sentiment over Black Friday. Discount retailers Wal-Mart Stores Inc (WMT.N) fell 0.5 percent to $53.74 and Target Corp (TGT.N) shed 0.6 percent to $56.88.
But Macy's Inc (M.N), operator of its namesake retail chain and upscale Bloomingdale's, edged up 0.4 percent to $26.
"The (Black Friday) data that has been leaking seems to be better than expected, and after two years of miserable performance at the malls, there seems to be some pent-up demand," Weeden & Co's Goldman said.
Del Monte Foods Co DLM.N rose 4.5 percent to $18.80 a day after the company agreed to a buyout led by Kohlberg Kravis Roberts & Co (KKR.N).
The U.S. stock market closed three hours early at 1 p.m. (1800 GMT) a day after the Thanksgiving holiday.
The shortened session saw 2.82 billion shares exchange hands on the New York Stock Exchange, the American Stock Exchange and Nasdaq. The year-to-date average volume of a full session is 8.65 billion shares.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of slightly more than 2 to 1, while on the Nasdaq, about seven stocks fell for every four that rose.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)
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The EU banks, the Eurozone and EU banks passed their stress tests a couple of months ago but for one or two provincial Spanish banks. But suddenly the 6 Irish banks are in terrible trouble. The stress tests included the possibility of a 20% fall in property prices but not a business and instituational run on the banks of 40b Euro.
All the nonsense about we want to give you a bailout, we don’t need a bailout, last week was misunderstood.
The Irish were enjoying a none front page back door bailout of the six Irish banks to the tune of 123b Euro from the ECB. But with a run on the banks the ECB had to consider the possibility of bankruptsy and default.
The ECB, EU, EU stability fund and the IMF had to insist on a front door bailout where there was no possibility of default.
Ignore the state bailout of the Irish banks; 30b Euro a couple of months ago sending the deficit to 32% of GDP and 40b this week. Just add 123b to the 80b owed to the ECB and UK banks and you get 200B Euro.
There are only 4m Irish citizens. The bank loans alone equal 50,000 Euro per man, woman and child.
The 85b Euro bailout is 8 times the money saved by the austerity budget over 4 years. And the new austerity budget comes on top of the two previous austerity budgets that together reduced public sector pay by 25%.
Think of a scenario where the six bankrupt banks filled for bankrupcy.
The names Bank of Ireland and Allied Irish would disappear but their function, branches and staff would be retained by new owners. The hari kari bankers would be failures but they wouldn’t have broken the law. The ECB and the British banks would loose their 200b Euros in loans but every irish man, woman and child would be spared a 50,000 Euro burden.
The well educated young would emmigrate to the UK or satellite Irelands in the US where they have distant relatives from the potato blight 200 years ago.
This is very real scenario.
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