USA: Wall Street suffers its second big slide of the week as nervous investors take some money off the table. Worries about global economic factors result in a spike in volatility across several markets

Record ID: 187074

  • Title: USA: Wall Street suffers its second big slide of the week as nervous investors take some money off the table. Worries about global economic factors result in a spike in volatility across several markets
  • Date: 14th May 2011
  • Summary: NEW YORK CITY, NEW YORK, UNITED STATES (MAY 13, 2011) (ORIGINALLY 4:3) (REUTERS) (SOUNDBITE) (English) ALEC YOUNG, EQUITY STRATEGIST, STANDARD & POOR'S SAYING "We're certainly wrapping up one of the most volatile weeks that we've seen in a while. I think the strength of first quarter earnings season was really priced in with earlier gains. This week there's been much more of a focus on a lot of global macro economic issues. For one thing we've got interest rates rising around the world so there's concern that demand for commodities may drop. We've had a higher margin requirements in a lot of different commodities -- that's added to the volatility. And we've seen a stronger dollar so that's also added to the volatility. So we've had a lot of global macro economic headwinds that I think are starting to knock the market around a little more."
  • Embargoed: 29th May 2011 13:00
  • Keywords:
  • Location: Usa, Usa
  • Country: USA
  • Topics: Finance
  • Reuters ID: LVA7CG5VP7KLWH116NPVTOW73TCG
  • Story Text: U.S. stocks fell on Friday (May 13) and the euro slid to a six-week low against the dollar as euro zone debt fears came back to the fore, accelerating a flight from markets pumped up by the Federal Reserve's easy money policy. Investors flocked to safe-haven assets such as the dollar and U.S. government bonds.
    The fall in U.S. stocks on Friday capped a second week of losses, reflecting growing worries that stocks are on the precipice of a pullback. The Dow Jones industrial average ended down 100.17 points, or 0.79 percent, at 12,595.75. The Standard & Poor's 500 Index was down 10.88 points, or 0.81 percent, at 1,337.77. The Nasdaq Composite Index was down 34.57 points, or 1.21 percent, at 2,828.47.
    Investors aren't worried about the U.S. economy, per se, but rather the global economy, resulting in a spike in volatility across several markets, explains Standard and Poor's equity strategist Alec Young.
    "We're certainly wrapping up one of the most volatile weeks that we've seen in a while. I think the strength of first quarter earnings season was really priced in with earlier gains. This week there's been much more of a focus on a lot of global macro economic issues. For one thing we've got interest rates rising around the world so there's concern that demand for commodities may drop. We've had a higher margin requirements in a lot of different commodities -- that's added to the volatility. And we've seen a stronger dollar so that's also added to the volatility. So we've had a lot of global macro economic headwinds that I think are starting to knock the market around a little more," said Young.
    Investors refocused on euro zone debt before meetings by finance officials in Brussels and as the Federal Reserve moved closer to ending a stimulus program. The sentiment also caused the euro to lose further ground against the dollar.
    Further explaining investor fears, Young said, "You've also seen the dollar doing better lately. Part of that is concerns about the sovereign stress in Europe but also the fact that the European Central Bank which people expected to be really aggressive with their interest rates hike -- signaled on May 5th that they were going to take a more of a go slow approach. So we're not going to see the rates shoot up quite as quickly in Europe because they're worried about weakness in the peripheral countries like Greece and Spain and Portugal. So that caused the euro to see a little bit of profit taking, so you got a variety of factors."
    World stocks, as measured by the MSCI world equity index, fell 0.7 percent to 343.82, having hit a more than three-week low earlier. Thomson Reuters global stock index dropped 0.8 percent. The euro traded down against the dollar, as investors' anxiety increased ahead of meetings of European policy makers next week. The euro is likely to remain pressured until at least after investors digest any outcome.
    The euro fell as low as $1.4065 (USD) on trading platform EBS, the weakest since April 1. It was last down 1 percent at $1.4097 (USD). A Eurogroup meeting of euro zone finance ministers is due to be held on Monday, followed on Tuesday by a meeting of European Union finance ministers. There are doubts whether a substantial agreement to help Greece manage its debts will emerge from the meetings, keeping uncertainty high over how long the country can avoid a restructuring. Concerns about Greece has pushed the euro down more than 5 percent from a peak near $1.4940 (USD) hit in early May.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register