Dow drops 180 points, ending 3-day winning streak
NEW YORK (AP) — A three-day winning streak in the stock market came to an end Wednesday as investors worried about Europe’s ability to contain its debt crisis. The Dow Jones industrial average fell 180 points. Raw materials companies had the biggest declines after prices for commodities like copper and oil fell sharply.
Traders focused on remarks from German Chancellor Angela Merkel suggesting that the second bailout package for Greece might have to be renegotiated. Several European leaders want banks to take bigger losses on Greek bonds. France and the European Central Bank oppose the idea.
Germany’s parliament is set to vote Thursday on a measure that would give a European rescue fund more powers to fight the region’s debt crisis. Finland’s parliament approved the proposal Wednesday, lifting some uncertainty over the debt crisis issue which has been dogging financial markets since late July.
“This is a market that has been fluctuating and is thoroughly susceptible to any news, any rumors, any innuendos,” about Europe, said Quincy Krosby, market strategist at Prudential Financial.
The Dow Jones industrial average fell 179.79 points, or 1.6 percent, to close at 11,010.90. It had gained 413 points over the past two days.
The Standard & Poor’s 500 index fell 24.32, or 2.1 percent, to 1,151.06.
The Nasdaq composite index fell 55.25, or 2.2 percent, to 2,491.58
The declines were broad. Five stocks fell for one that rose on the New York Stock Exchange. Only 13 of the stocks in the S&P 500 rose. Four were flat.
Raw materials stocks fell the most of any industry group in the S&P 500, 4.5 percent. Investors fear that Europe’s problems could cause the global economy to slip into another recession, weakening demand for basic materials such as copper. The price of copper plunged 5.6 percent; crude oil fell 3.8 percent to $81.21 barrel.
Miner Freeport-McMoRan Copper & Gold Inc. fell 7.2 percent, and Cliffs Natural Resources Inc. fell 8.4 percent. Coal producer Alpha Natural Resources fell 11 percent, the most of any company in the S&P.
Trading varied widely throughout the day. The Dow jumped 126 points minutes after the opening bell on a government report that orders for manufactured goods fell just 0.1 percent in August, a smaller decline than economists predicted.
Those gains were gone within an hour, leaving the Dow, S&P 500 and Nasdaq mixed through the rest of the morning. Stocks started to fall in the afternoon, and the selling intensified in the last half-hour of trading.
The decline followed three days of gains. Stocks rose earlier this week on hopes that Europe was moving closer to resolving its debt problems. The Dow soared 272 points on Monday, its fourth-largest increase this year, and another 147 points on Tuesday.
“The market got ahead of itself,” said Joseph Saluzzi, co-head of stock trading at Themis Trading. Investors “assumed some kind of deal would be structured, and that was so far away from happening.”
Technology companies fared better than the overall market. Amazon.com shot up 2.5 percent after the online retailer unveiled a new tablet device called the Kindle Fire. It will cost $199 and will rival Apple Inc.’s hugely successful iPad.
Jabil Circuit Inc. rose 8.4 percent, the most of any company in the S&P 500. The electronic parts maker reported strong earnings and a fourth-quarter earnings forecast that was better than analysts had anticipated.