Wall Street snaps three-day rallyAugust 17th, 2011 - 5:54 am ICT by IANS
New York, Aug 17 (IANS) Wall Street ended a choppy session in the red after three straight gains as comments from German and French leaders failed to ease market concerns over European debt woes, Xinhua reported.
At a press conference after their emergency meeting, German Chancellor Angela Merkel and French President Nicolas Sarkozy Tuesday detailed plans for closer euro zone integration. However, it failed to boost market confidence as they didn’t mention any plan to increase the size of euro zone’s rescue fund or begin sales of euro bonds.
Investors felt disappointed at the outcomes as they were expecting some concrete plans to stem the debt problems spreading to more euro zone countries.
As a result, financials took a heavy blow and dropped the most in S&P; 500 big-cap sectors, as financial shares were seen as vulnerable to a European fiscal crisis.
Meanwhile, stocks were under pressure as data showed Germany’s GDP increased by only 0.1 percent in the second quarter this year after a revised 1.3 percent jump from the previous quarter, spurring fears that the biggest economy in Europe may be losing some momentum.
Limiting some losses, investors felt a little bit relieved after Fitch Ratings Tuesday affirmed its AAA debt rating on the US, citing the key pillars of the country’s creditworthiness remains intact.
The rating agency also put the outlook of US debt rating at stable. Fitch’s affirmation came after a similar decision by its rival Moody’s Investors Service, making Standard & Poor’s the only one in the three major international rating agencies to downgrade US debt rating.
Some analysts believed that as the downgrade aftermath fades away, economic data will be even critical for future market performance.
On corporate news front, Wal-Mart Stores said Tuesday that its second-quarter profit rose 5.7 percent as its increasing international sales and cost cutting could contribute to offsetting continuing sales decline at the retail stores in the US.
According to the data, the world’s largest retailer reported its net income of $3.8 billion in the three months ended July 31, or $1.09 a share, compared with $3.6 billion, or 97 cents a share for the previous year.
As of Tuesday’s close, the Dow Jones industrial average dropped 76.97 points, or 0.67 percent, to 11,405.93. The Standard &Poor;’ s 500 was down 11.73 points, or 0.97 percent, to 1,192.76. The Nasdaq Composite Index declined 31.75 points, or 1.24 percent,to 2, 523.45.
In other markets, the US dollar traded mixed against major currencies in late New York trading while crude prices slipped on lingering European debt concerns.
Light, sweet crude for September delivery fell $1.23, or 1.40 percent, to $86.65 a barrel on the New York Mercantile Exchange.
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