REFILE-US STOCKS-Markets tumble 2 percent on Japan worries

Wed Mar 16, 2011 3:00pm EDT

Related Topics

(Fixes indexes in fourth bullet point)

* Japan nuclear crisis escalates

* Oil prices rise on Bahrain violence

* IBM and Apple fall on analyst downgrades

* Indexes down: Dow 2.4 pct, S&P 2.4 pct, Nasdaq 2.2 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to afternoon trading, changes byline)

By Ryan Vlastelica

NEW YORK, March 16 (Reuters) - U.S. stocks slumped more than 2 percent on Wednesday in a third day of selling resulting from Japan's crisis, and analysts saw further market volatility ahead.

The S&P 500, down 3.1 percent for the week, and the Nasdaq composite indexes turned negative for the year after the chief of the U.N.'s nuclear watchdog said the situation at a damaged nuclear reactor in earthquake-stricken Japan was "very serious." For details, see [ID:nLDE72E24B] and [ID:nWEA9026]

The comments drove investors to seek safety in bonds.

In another headwind for equities in a different part of the globe, escalating violence in the Middle East caused Brent crude to climb 1.9 percent. [ID:nL3E7ED0N9]

"What we're seeing with oil is the greatest supply risk in years. What we're seeing in Japan is unlike anything we've seen before," said Phil Flynn, senior market analyst with PFG Best in Chicago.

Flynn said Wall Street's fear gauge could be headed back toward a significant marker.

"Based on the events now, it isn't impossible that the VIX could get up to where it was at the height of the (financial) crisis. It could triple," he said.

The CBOE market volatility index .VIX jumped 15 percent and is up more than 40 percent this week. The IShares MSCI Japan Index Fund (EWJ.P), which owns Japanese stocks, slid 4.1 percent to $9.62. The ETF is down 11 percent this week due to uncertainties from the crisis, which began after Friday's earthquake and tsunami.

The Dow Jones industrial average .DJI was down 280.34 points, or 2.36 percent, at 11,575.08. The Standard & Poor's 500 Index .SPX was down 30.56 points, or 2.38 percent, at 1,251.31. The Nasdaq Composite Index .IXIC was down 58.64 points, or 2.20 percent, at 2,608.69.

Rising radiation levels in Japan caused workers to withdraw briefly from a nuclear power plant and a helicopter was unable to drop water to cool the most troubled reactor. Nikkei dollar-denominated futures NKc1 were down 5.2 percent.[ID:nL3E7EF450]

Nuclear-related stocks slid on bets the crisis would cripple the industry's growth worldwide. Cameco Corp (CCJ.N) shed 9.1 percent to $29.55 and Shaw Group SHAW.N dropped 3.7 percent. The Global X Uranium ETF (URA.P) lost 6.1 percent.

"We're not recommending any new purchases of uranium stocks," said Joshua Brown, vice president of investments at Fusion Analytics in New York. "The growth picture there is night and day compared with last week."

U.S.-listed shares of Toyota Motor Co (TM.N) dropped 1.4 percent to $80.24 after the automaker said it would continue to halt operations at its 12 main Japanese assembly plants. [ID:nL3E7EG1CK]

Both Apple Inc (AAPL.O) and International Business Machines Corp (IBM.N) sank after both received analyst downgrades. Apple lost 3.8 percent to $332.38 and IBM was off 3.9 percent to $152.77. [ID:nL3E7EG25D] [ID:nL3E7EG2F7] (Reporting by Ryan Vlastelica; Editing by Kenneth Barry)

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Comments (1)
garilou wrote:
What happens in Japan, in North Africa, especially in Libya, and Bayren is terribly sad.
As for the markets, before even those events arrived, we were anyway due for a big correction for the 2010 till end of January 2011, after a long strike that had turned into a bubble, lead by a few major stocks, but most of all an incredible optimism.

I guess when the correction will be judged to have bottomed out, the markets won’t care anymore for Japan, N.A. and will go back up happily, whether or not the problems in Japan and elsewhere are still raging. After the panic, everyone will ask which stock could the most profit from those tragedies.

So indifferent is the speculator in each of us.

Mar 16, 2011 4:17pm EDT  --  Report as abuse
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