Stocks tumbled on Wednesday, with the Dow losing 237 points, as investors dumped technology and financial services shares one day after a big advance. The DJIA closed 236.77 points lower at 11147.44 , hitting a low not seen since August 2006. The S&P500 lost 29.01 points to close at 1244.69, its lowest close since July 2006. The Nasdaq closed 59.55 points lower at 2234.89, ending at its lowest point since March.
Stocks struggled in the aftermath of Tuesday's advance, with oil prices seesawing on Middle East tensions and the weekly supply reports. The Dollar slumped versus other major currencies after comments from the ECB president indicated that interest rates are set to rise.
Merrill Lynch slipped after Fitch put the company's long term credit default rating on watch for a potential downgrade. AIG, American Express, Bank of America, Citigroup and JPMorgan Chase all tumbled.
Cisco Systems fell 5.7 percent in active trade after two bearish analyst notes. RBC Capital Markets analysts cut Cisco's price target from $27 from $29, saying the company sees a tech spending recovery happening later than initially thought. UBS said Cisco could be looking at tough sales in the US and Europe. Other tech stock, including Intel and Dell slipped too, as investors backed out after the previous sessions rise.
Northwest Airlines said it is cutting 2500 jobs, or 7 percent of its workforce, as well as charging for checked bags and boosting other fees. Northwest is struggling with the spike in fuel prices. The stock fell 15.7 percent.
Alcoa began the second quarter results reporting period for Dow components late Tuesday. The company reported weaker earnings of 66 cents per share on lower sales of $7.6bn, reflecting the impact of higher costs. Results, topped analysts expectations. Alcoa rose modestly Wednesday.
Arris Group slumped 14 percent after it said second quarter sales won't meet estimates and earnings will come in at or near the low end of its previous forecast. The communications technology company cited weaker sales of voice enabled cable modems.
QLogic boosted its fiscal first quarter sales and earnings outlook, sending shares of the company up 10 percent.
Oil prices seesawed in the afternoon, with US light crude oil for August delivery ending the session up a penny at $136.05 a barrel on NYMEX. Crude prices had jumped in the morning on reports that Iran test fired ballistic missiles, which revived worries that unrest in the Middle East could disrupt oil supplies. But prices, swayed after the government's weekly report showed crude stockpiles fell more than expected and gasoline supplies were larger than forecast last week. Crude prices had fallen more than $9 over the last two sessions.
The national average price for a gallon of regular unleaded gas held steady at a record $4.108 for a third day.
In currency trading, the dollar fell versus the euro and yen after ECB President Jean Claude Trichet's hawkish comments about inflation to the European parliament. The remarks reinforced the idea that the ECB will raise interest rates again following its hike last week.
Treasury prices fell, raising the yield on the 10 year note to 3.9 percent from 3.88 percent.
COMEX gold for August delivery rose $5.30 to $928.60 an ounce.
The Nikkei average rose 0.1 percent today, led higher by bank stocks on the view that they are undervalued, while Fast Retailing jumped on expectations for earnings results due out after the close. The Nikkei closed 15.08 points higher at 13067.21.
UK stocks closed higher on Wednesday as beaten down banking stocks rebounded, while firmer metal prices buoyed miners. The FTSE100 closed 89.1 points higher at 5529.6, after falling 1.3 percent on Tuesday. But with data light and volumes thin, many market participants doubted the sustainability of the rise on the index.
Banks were the leading sector, accounting for 24 positive index points after Fed Chairman Ben Bernanke said Tuesday the US central bank may keep an emergency lending facility for big Wall Street banks open longer than it initially intended. Barclays, RBS, HBOS, Lloyds TSB and Standard Chartered advanced between 1 and 6.7 percent. Bradford and Bingley soared 27.2 percent despite several investment banks cutting their price targets on the lender. The Bank of England began a two day rate setting policy meeting and will announce its verdict today. Analysts expect the central bank to leave rates unchanged at 5 percent.
Miners tracked higher metal prices, with gold trading higher after news that Iran had test fired nine long range and medium range missiles. BHP Billiton, Rio Tinto, Vedanta Resources, Anglo American, Antofagasta, Ferrexpo and Xstrata were all up between 0.4 and 5.1 percent. Alcoa also boosted sentiment after it posted stronger than expected results late Tuesday.
In the commodity sector, Tullow Oil added 0.5 percent after the company gave an optimistic outlook for reserves and for the production start up at its main Ghana field and disclosed another discovery in Uganda.
The LSE jumped 10.3 percent to top the FTSE100 leaderboard and recover some recent losses after the company said its revenue for the first quarter rose 8 percent to £178m.
WPP reversed earlier losses to end up 1.2 percent after the company launched a hostile bid worth £1.08bn for
Taylor Nelson Sofres which gained 10.7 percent as Germany's
Gfk Holdings said it was working on a rival cash offer.
Economics
EMU ECB monthly bulletin (Jul) 09.00 bst
The overall tone of the monthly bulletin generally reflects the introductory statement of the previous weeks press conference. The ECB occasionally uses the insight boxes to underline issue it believes warrant clarification or broader understanding.
UK Bank of England rate announcement (July) 12.00 bst
Both the growth and inflation outlook look terrible. Indicators show the economy slowed markedly in June and the risks of a recession have increased significantly. But with the oil prices moving up daily, the BoE need to signal their commitment to price stability. Therefore rates will be on hold until is absolutely clear that there is no risk of second round effects developing, particularly from wages and that the downturn in growth is severe enough that inflation will return to target in the medium term.
US Initial jobless claims (week 5 July) 13.30 bst
Last weeks initial claims jumped to 404,000 which included 4,000 filings from people who lost work due to the floods in Iowa. The 4 week average for initial claims have increased further to around 390,000, and this weeks claims are expected to be at this level. However, there is the potential for seasonal volatility, as the reference week covers the start of a new quarter (which means a surge in initial claims) along with the July 4 holiday (government offices shut). On June 30, a new emergency unemployment program was enacted offering an additional 13 weeks of extended benefits, but this program is not expected to begin paying benefits until the following week. Continuing claims are on an overall rising trend despite falling in last week's release, and an increase up to 3.16m is expected.
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