Tuesday, June 16, 2009

Wall Street sees worst day in a month

Wall Street sees worst day in a month
Dow up in '09
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By Leah Schnurr
NEW YORK (Reuters) - U.S. stocks tumbled, marking
their worst slide in a month on Monday after regional manufacturing data dented optimism about the economy's health and resource shares fell alongside commodity prices.
After a series of signs the economy may be stabilizing, investors are looking for more definitive signals of its improving health. Analysts also said a pullback was unsurprising after a three-month rally.
Economists had expected to see slight improvement in the New York Fed's Empire State index, but the survey showed the factory sector shrank at a much more severe rate in June than the previous month.
"The bottom line is investors were starting to factor in a V-shaped recovery to the economy," said Alan Lancz, president of Alan B. Lancz & Associates Inc, in Toledo, Ohio.
"Not only do prices get ahead of themselves, but there's also a situation where if we don't get that V-shaped recovery, then you have more than just a temporary pullback. That's what might scare investors in the more immediate term."
Manufacturers' shares fell, including 3M (MMM.N), which was down 2.8 percent at $59.31, while Caterpillar (CAT.N) shed 4.3 percent to $36.12.
Oil prices fell from nearly an eight-month high after Russia expressed confidence in the U.S. dollar as the world's reserve currency, increasing the greenback's safe-haven appeal. Commodity prices and the dollar have moved inversely of late. Gains in the dollar makes oil more expensive for holders of other currencies.
Chevron (CVX.N) fell 2.2 percent to $71.08. The S&P energy index .GSPE slid 2.3 percent.
The Dow Jones industrial average .DJI fell 187.13 points, or 2.13 percent, to 8,612.13. The Standard & Poor's 500 Index .SPX lost 22.49 points, or 2.38 percent, to 923.72. The Nasdaq Composite Index .IXIC dropped 42.42 points, or 2.28 percent, to 1,816.38.
While the recent run-up in commodity prices had helped stocks extend their rally, there has also been concern that a surge in oil and other commodities could hamper any budding economic recovery. Higher energy costs are a drag on consumer spending and corporate profits.
In light volume, the indexes racked up their biggest one-day percentage loss since mid-May.
But the broad S&P 500 is still up 36.5 percent from the 12-year closing low of March 9.
A SPIKE IN VOLATILITY
The CBOE Volatility Index .VIX, known as Wall Street's fear gauge, closed above the 30 level for the first time since early June, suggesting more turmoil could be in store. The VIX jumped 9.5 percent to end at 30.81, its biggest percentage gain since late April. Continued...
Source: Reuters

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