Friday, June 4, 2010

US stocks fall

NEW YORK: Stocks fell on Tuesday, June 2 as energy shares slid after the latest failed attempt to halt the oil spill in the Gulf of Mexico and the U.S. government announced a criminal probe into the disaster, according to Reuters.

Investors punished shares of companies directly involved with the spill and losses accelerated into the close following the news of the investigation.

"It's the fact that no one can really quantify the cost of the BP disaster out there," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas.

"There's so much uncertainty, investors are stepping to the sidelines."

U.S.-listed shares of BP Plc (BP.L)(BP.N), which owns the well, tumbled 15 percent. The losses signaled growing frustration over the difficulty of sealing off the worst oil spill in U.S. history.

The Dow Jones industrial average .DJI dropped 112.61 points, or 1.11 percent, to 10,024.02. The Standard & Poor's 500 Index .SPX fell 18.70 points, or 1.72 percent, to 1,070.71. The Nasdaq Composite Index .IXIC gave up 34.71 points, or 1.54 percent, at 2,222.33.

Decliners carried the day on the New York Stock Exchange, outpacing advancers by almost 4 to 1.

BP's American Depositary Receipts have now lost about $75.03 billion since the April 20 rig explosion, and the stock has the lowest price-to-earnings ratio of any of the major oil companies as a result of the fall.

Halliburton Co, which performed some work on the well, lost 14.8 percent after Goldman Sachs removed the company from its "conviction buy list.

Transocean (RIG.N), which owns the rig, slid 11.9 percent to $50.04, while the S&P energy index .GSPE shed 4.3 percent.

Markets were choppy throughout the day and had earlier found support from data that showed manufacturing expanded for a tenth straight month in May.

In addition to the stronger-than-expected manufacturing data, CONSTRUCTION [] spending recorded its largest gain in nearly 10 years in April, government data showed.

Despite the positive U.S. data, investors worry about what impact the euro zone's debt crisis will have on global economic growth. Indeed, data showed a more sluggish pace in euro zone manufacturing, while the rate of China's factory output eased.

On the upside, Apple Inc (AAPL.O) rose 1.5 percent to $260.83 as a successful international launch of its iPad prompted analysts to raise earnings and sales estimates.

In merger news, ev3 Inc (EVVV.O) jumped 17.4 percent to $22.22 after Covidien Plc (COV.N) agreed to buy the maker of stents and other vascular devices for $2.6 billion. Covidien shares slipped 2.7 percent to $41.24.

Regarding the oil spill investigation, the FBI and other federal agencies, will participate.

"If we find evidence of illegal behavior, we will be forceful in our response," U.S. Attorney General Eric Holder said in New Orleans. - Reuters

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