USA: Wall Street dives on Japan nuclear crisis, but Fed helps stem fall

Record ID: 186925

  • Title: USA: Wall Street dives on Japan nuclear crisis, but Fed helps stem fall
  • Date: 15th March 2011
  • Summary: NEW YORK CITY, NEW YORK, UNITED STATES (MARCH 15, 2011) (ORIGINALLY 4:3) (REUTERS) (SOUNDBITE) (English) STEPHEN FREEDMAN, HEAD OF INVESTMENT STRATEGY, UBS WEALTH MANAGEMENT RESEARCH AMERICAS, SAYING: "Well the focus was clearly on the catastrophic events unfolding in Japan. After the earthquake and Tsunami that hit last Friday, the focus turned to the unfolding nuclear disaster in the Northeast of the country and clearly we're in a situation that is very fluid, where there is a lot of uncertainty as to what exactly is going to happen. So there really was a knee-jerk reaction across markets with risk assets across the board including equities selling off and treasuries rallying."
  • Embargoed: 30th March 2011 13:00
  • Keywords:
  • Location: Usa, Usa
  • Country: USA
  • Topics: Disasters / Accidents / Natural catastrophes,Economic News
  • Reuters ID: LVABDP0OZ1Z63ZZL0CHANL95VSOI
  • Story Text: U.S. stocks fell one percent but ended far from session lows on Tuesday (March 15) on the Federal Reserve's more upbeat economic view and growing sentiment that Japan's nuclear crisis would only temporarily depress shares.
    In a second straight day of losses tied to Japan, the S&P 500 fell to within four points of support at 1,257, its 2010 close. The benchmark index fell more than two percent in early trading and the Nasdaq briefly turned negative for the year.
    Equities nearly halved their losses after the Fed stuck with its ultra-loose monetary policy and said the economy was gaining traction.
    The Dow Jones industrial average was down 137.74 points, or 1.15 percent, at 11,855.42. The Standard & Poor's 500 Index was down 14.52 points, or 1.12 percent, at 1,281.87. The Nasdaq Composite Index was down 33.64 points, or 1.25 percent, at 2,667.33.
    Volume was high, with about 10.05 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's daily average of 8.47 billion.
    Options activity on the iShares MSCI Japan Index fund suggested that some investors believe the selloff since Japan's worst recorded earthquake was overdone. The investors closed out recent long put positions or opened bullish bets.
    The fund, which has a market cap of about $5.58 billion (USD), ended 0.2 percent lower on record high volume and was the most actively traded ETF.
    "Well the focus was clearly on the catastrophic events unfolding in Japan. After the earthquake and Tsunami that hit last Friday, the focus turned to the unfolding nuclear disaster in the Northeast of the country and clearly we're in a situation that is very fluid, where there is a lot of uncertainty as to what exactly is going to happen. So there really was a knee-jerk reaction across markets with risk assets across the board including equities selling off and treasuries rallying," said Stephen Freedman of UBS Wealth Management Research.
    A Japanese nuclear power plant caused low levels of radiation to drift into Tokyo, prompting people to flee the capital. Officials and markets were still trying to assess the full extent of destruction from Japan's earthquake and tsunami, with more than 10,000 people feared dead.
    The Global X Uranium exchange traded fund fell 7.8 percent to $14.50. Shaw Group, an engineering and construction company that is part of a consortium that builds reactors, dropped 2.1 percent to $34.14 on more than five times its 10-day average trading volume.
    Shares of Dow component General Electric Co, which has combined nuclear ventures with Japan's Hitachi Ltd, dropped 1.6 percent to $19.61 on more than twice its 50-day average volume.
    Almost four stocks fell for every one that rose on the New York Stock Exchange while on the Nasdaq more than three stocks fell for every riser.
    At its session low, the S&P 500 had given back more than half the gains of the latest leg of the stock market rally, from Dec. 1 to the year's high on Feb. 18. The S&P 500 is still up 21 percent since September.
    The CBOE VIX volatility index rose 15 percent to 24.32.
    Dollar-denominated Nikkei futures fell 4.9 percent and are down more than 10 percent for the year.
    Among U.S. stocks affected by Japan, insurer American International Group Inc slid 1.9 percent at $36.78, while aluminum producer Alcoa Inc lost 0.5 percent at $16.04.
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