BANK shares weighed on stocks yesterday as Europe’s smouldering debt crisis and fears of an insider trading probe in the United States sapped buying interest for most of the session.
The Nasdaq fared better than the Dow and the S&P 500 after upgrades to chipmaker SanDisk and chip-gear makers Amkor Technology and Teradyne.
Risk aversion kicked in as stocks followed the euro’s fall against the US dollar after turmoil in Ireland’s fragile coalition government overshadowed an agreed-on bailout of the country.
Investors fear the crisis will spread throughout Europe, raising the spectre of losses by exposed US banks. The KBW bank index lost 1.5 per cent and Dow component JPMorgan Chase & Co fell 2.3 per cent to $38.51.
“All the continued concerns coming out of Europe and the debt situation there is what got us started on the way down today,” said Tom Schrader, managing director of US equity trading at Stifel Nicolaus Capital Markets in Baltimore.
Worry about a broad insider trading probe in the United States hit shares of large brokerages and Goldman Sachs Group fell 3.4 per cent to $161.05.
“The situation on insider trading put some more fuel on the fire for short-term trading in the afternoon,” said Schrader, who added the concerns were “probably a gross over-reaction” to the insider trading probe.
The Dow Jones industrial average fell 24.97 points, or 0.22 per cent, to 11,178.58. The Standard & Poor’s 500 Index dipped 1.89 points, or 0.16 per cent, to 1,197.84. But the Nasdaq Composite Index gained 13.90 points, or 0.55 per cent, to 2,532.02.
Ireland’s unpopular coalition government began to crumble a day after agreeing on an European Union/International Monetary Fund bailout, casting doubt on its ability to push through an austerity budget crucial to receiving assistance.
US-listed shares of Bank of Ireland tumbled 16.9 per cent to $2.22, and those of Allied Irish Banks lost 9.8 per cent to $1.11. Both have lost nearly half their market value since August.
The S&P energy index bounced from a more than 2.2 per cent decline to close down 0.4 per cent after US light crude futures capped losses, trading at $81.72 per barrel after earlier falling below $81.