Weaker financials drag Wall Street lower

Dow Jones: 12,050 (–59.67) Nasdaq: 2,686.75 (+17.56) S&P 500: 1,283.50 (–3.64)

Dow Jones:12,050 (–59.67) Nasdaq:2,686.75 (+17.56) S&P 500:1,283.50 (–3.64)

ENERGY AND financial stocks led the losses in a volatile session on Wall Street as traders continued to digest the downbeat assessment of the US economy given by the Federal Reserve late in the previous session and also worried about a disappointing rise in unemployment claims.

The markets tumbled in early trading on these worries, but then managed to rally somewhat towards the end of the session on news reports that European leaders had reached a breakthrough on a Greek austerity plan.

The financial sector saw the sharpest losses in the session, falling 1 per cent as Fifth Third Bancorp fell 2.5 per cent to $12.09 and Bank of New York Mellon declined 2.3 per cent to $25.44.

READ MORE

Industrial stocks also suffered from a “risk off” trade. Boeing was down 1.2 per cent to $71.25 as the SP industrial index fell 0.3 per cent.

But the worst losses came from the energy sector as oil prices fell hard after an unexpected intervention in the oil markets by the International Energy Agency.

The S&P energy index was down 1.1 per cent as Schlumberger fell 0.6 per cent to $83.10 and Chevron lost 1.7 per cent to $99.36.

The sell-off in risk assets began late on Wednesday after the Federal Reserve lowered its growth forecast for the US economy and lifted its inflation expectations.

The downbeat mood persisted into yesterday’s session, and the S&P 500 was down 1.5 per cent by mid-session.

The markets reversed some of their losses in late trading following a Reuters report that Greece had forged a deal with the EU and IMF on a five-year austerity plan.

Helping keep the index in negative territory, however, was data from the labour department showing that the number of unemployed Americans filing for jobless benefits rose 9,000 to a seasonally adjusted 429,000 last week, which was more than had been expected by economists.

Lennar, a home builder, reported a loss that was better than analysts had expected. Its stock was up 2.3 per cent to $18.51, but it was still 1.8 per cent lower over the year.

Bed Bath Beyond, the home furnishings retailer, rose 5.3 per cent to $56.93.– (Copyright The Financial Times Limited 2011)