U.S. Stock Losses Slow
Wall Street ended broadly lower but showed some signs of stability Monday, as blue-chip indexes rebounded from their lows of the session.
The Nasdaq composite index was hit harder as technology stocks continued to fall out of favor with risk-averse investors, but it also finished above its lows for the day.
Foreign markets, by contrast, fell sharply, with declines of about 10% in some emerging markets.
Stocks worldwide have been tumbling since May 11, after the Federal Reserve signaled that it might continue to raise short-term interest rates to quash inflation.
Monday’s sell-off reflected Wall Street’s continued anxiety over the prospect of more rate hikes from the Fed. Investors, hopeful that the central bank was near the end of its credit tightening, had catapulted stocks to multiyear highs this month, but a report last week on U.S. April consumer inflation seemed to dash those hopes.
Fearful that the Fed might trigger a recession, investors have been fleeing any asset perceived to be risky.
“What needs to happen is investors need to start discerning what’s risky and what’s not,” said Jack Ablin, chief investment officer for Harris Private Bank. “Right now, they’re just busy selling without any regard for quality.”
But as the session wore on Monday, Wall Street appeared to become a bit more discerning.
The Dow Jones industrial average was off as much as 100 points early in the session, but then closed down 18.73 points, or 0.2%, at 11,125.33. The Dow briefly turned positive late in the day as investors bought up large-cap stocks, which have lagged behind the broader market this year.
The Standard & Poor’s 500 index lost 4.96 points, or 0.4%, to 1,262.07.
The Nasdaq also pulled up from its lows, but ended with a loss of 21.02 points, or 1%, at 2,172.86.
The Russell 2,000 small-stock index also gave up 1%.
Declining issues led advancers by more that 2 to 1 on the New York Stock Exchange and on Nasdaq in continued heavy trading.
As stocks fell, some investors bought bonds. The yield on the 10-year Treasury note dipped below 5% for the first time in a month before the bond market’s rally fizzled in afternoon trading. The 10-year yield slipped to 5.04% from 5.06% on Friday.
In commodities trading, crude oil futures bounced back after hitting a six-week low at midday, although traders were still worried that persistent high prices were eroding demand. A barrel of light crude gained 70 cents to settle at $69.23 in New York trading.
Gold futures were little changed, gaining 30 cents an ounce to $657, after plunging last week.
Elsewhere, the U.S. dollar fell against the yen and euro.
The heaviest selling Monday was in foreign stock markets, led by emerging markets including Russia, India and Brazil.
Russia’s main stock index fell 9%. The Indian market tumbled 10% before trading was suspended for an hour. After reopening, the Indian stock index ended with a loss of 4%.
In Brazil, the key index fell 3.3% and the Mexican stock market dropped 4%.
Markets in developed nations also slumped, but the declines were less severe than in emerging markets, many of which have rocketed for the last few years.
Japan’s Nikkei stock average fell 1.8%; Britain’s FTSE 100 dropped 2.2%, Germany’s DAX index slid 2.2% and France’s CAC-40 was lower by 2.7%.
On Wall Street, tech stocks waned as investors fretted about a potential slowdown in the economy. Intel, which last month reduced its spending budget, slid 35 cents to $18.01, Dell also has warned of slowing computer sales, and its shares fell 19 cents to $24.38.
Food producers rallied as some buyers sought companies that often have held up well in recessions. Campbell Soup rose $1.10 to $33.75 and William Wrigley was up $1 to $47.26.
Most energy stocks fell even as the price of oil rebounded. Valero Energy lost $1.83 to $57.07 and Marathon Oil dropped $3.07 to $72.43.
A small rebound in many industrial metal prices didn’t help that sector. Aluminum producer Alcoa fell 83 cents to $31.15. Mining firm Inco sank $2.70 to $60.
