- Title: USA: Fraud charges against Goldman Sachs see U.S. stocks plunge
- Date: 17th April 2010
- Summary: NEW YORK, NEW YORK, UNITED STATES (APRIL 16, 2010) (REUTERS) STREET SIGN NEAR GOLDMAN SACHS BUILDING EXTERIOR OF GOLDMAN SACHS BUILDING WINDOWS PEOPLE EXITING GOLDMAN SACHS THROUGH REVOLVING DOOR SIGN OUTSIDE BUILDING PEOPLE WALKING OUTSIDE BUILDING
- Embargoed: 2nd May 2010 13:00
- Location: Usa
- Country: USA
- Topics: Legal System,Economic News
- Reuters ID: LVA7GG85OQ304SEQDD00MKC48PSW
- Story Text: Financial stocks plunged on Friday (April 16) in the heaviest trading this year, dramatically ending Wall Street's six-day winning streak as fraud charges against Goldman Sachs and disappointing earnings sent investors running for cover.
The decline was the market's biggest in nearly two months, taking the shine off a strong rally just as investors await a crush of earnings reports next week.
Goldman fell 13 percent to $160.89 in its worst one-day drop since January 2009 on a volume of more than 100 million shares after the Securities and Exchange Commission charged the Wall Street firm with fraud over its handling of a debt product tied to subprime mortgages.
Financial shares around the world sank on the news as investors worried about a potential crackdown on other companies, with rival investment bank Morgan Stanley losing 4.7 percent to $29.42 while the KBW banks index lost 3.6 percent. Both Goldman, which denied the SEC charges, and Morgan report earnings next week.
The CBOE Volatility index, Wall Street's favorite measure of investor fear, surged 16 percent.
The Dow Jones industrial average was down 125.91 points, or 1.13 percent, at 11,018.66. The Standard & Poor's 500 Index was down 19.54 points, or 1.61 percent, at 1,192.14. The Nasdaq Composite Index was down 34.43 points, or 1.37 percent, at 2,481.26.
After a rally that lasted six straight weeks, stocks were down as Google Inc, Bank of America Corp and General Electric Co reported quarterly results that fell short of heightened expectations.
Bank of America reported higher-than-expected earnings but said loan demand was low, while GE posted weak first-quarter revenue.
BofA fell 5.5 percent to $18.41 and was the top percentage decliner on the Dow. GE, another Dow component, sank 2.7 percent to $18.97.
Google lost 7.6 percent to $550.15 a day after it posted a 23 percent jump in quarterly revenue, but some investors had hoped for even better results.
On the upside, Mattel Inc posted a surprise first-quarter profit, sending the stock up 0.4 percent to $23.84. Gannett Co Inc also posted a better-than-expected first-quarter profit, but the stock slid 0.6 percent to $18.04.
The Goldman news also had an impact on commodities, with crude oil futures dropping 3 percent to $82.95 per barrel.
In economic news, the Thomson Reuters/University of Michigan's Surveys of Consumers showed consumer sentiment took a surprising negative turn in early April due to a grim outlook on income and jobs.
U.S. housing starts rose more than expected in March while permits to build new homes scaled a 17-month high, according to a government report.
Trading volume was the biggest since May 8, 2009. About 13.7 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq. Last year's estimated daily average was 9.65 billion.
Decliners outnumbered advancers on the New York Stock Exchange by a ratio of about five to one, while on the Nasdaq, about almost three stocks fell for every one that rose.
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