Wall St spooked by bank probe, Greece blast

Thursday, May 13, 2010
By Paul Martin

A late sell-off inflicted heavy losses on US stock markets on Thursday, with investors spooked by news of a blast in Athens and the spectre of criminal charges against nine banks.

13 May 2010

The blue-chip Dow Jones Industrial Average fell 113.96 points – or 1.05pc- to 10,782.95. The tech-rich Nasdaq lost 30.66 points – or 1.26pc – to 2,394.36 while the broader S&P’s 500 index lost 14.23 points – or 1.21pc – to 1,157.44.

Bank stocks fell on reports that New York’s attorney general is examining eight banks to determine whether they misled ratings agencies about mortgage securities.

Tech shares were hit by a cautious forecast from computer networking equipment Cisco Systems.

Having lurched wildly for the past week, stocks hovered in or around the red for most of Thursday, before a late sell-off.

“Stocks spent most of the session mired in negative territory with a moderate loss, but sellers have intensified their efforts in recent action,” Briefing.com analysts said.

As the markets closed, news trickled in from Greece that an explosive device went off outside a maximum security prison near Athens on Thursday, injuring one person.

The country has recently been the scene of violent protests over austerity measures linked to a massive IMF-European Union bailout.

US stocks had soared Wednesday on favorable US economic data as well as positive news in Europe even as the continent battles a debt crisis.

Stock markets initially pared a fraction of Wednesday’s gains on a mixed jobs report which showed new claims for unemployment insurance benefits fell last week for the fourth time in a row. But the report also reaffirmed the slow pace of the economic recovery.

The Labor Department said initial jobless claims totaled 444,000 in the week ending May 8, down 4,000 from the prior week’s revised figure of 448,000.

“The labor market is gradually recovering as businesses are growing more confident and slowing the pace of payroll reduction,” said Andrew Gledhill at Moody’s Economy.com.

The euro slumped to a new 14-month low at $1.2522 amid persistent concerns over the European debt crisis.

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