US stocks slide as downgrades pull back gains

US stocks slid yesterday, giving the S&P 500 its worst day since November, as renewed worries about the Eurozone crisis caused the market to pull back from recent gains.

Shares of McGraw-Hill shed 13.8 per cent to $50.30, their worst daily percentage decline since the October 1987 market crash, after news the US Justice Department plans to sue Standard & Poor’s, a unit of McGraw-Hill, over its ratings in 2007 of some mortgage bond deals. Moody’s Corp shares were down 10.7 per cent at $49.45, their worst one-day drop since August 2011.

Chevron and Wal-Mart were among the biggest drags on the Dow after analyst downgrades, and all 10 S&P 500 sectors were lower. The losses follow Friday’s market climb that left the S&P 500 at a five-year high and the Dow above 14,000.

“The market is extended and due for a pullback. I think people are looking for an excuse to make sales, and there (is) the concern coming from Europe,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.

Spanish and Italian bond yields rose, renewing worries about the Eurozone’s sovereign debt crisis. Spain’s Prime Minister faced calls to resign over a corruption scandal, while a probe of alleged misconduct involving an Italian bank was expected to widen three weeks before a national election.

Adding to market pressure, data from the US Commerce Department showed overall factory orders for December were below expectations.

The Dow Jones industrial average was down 129.71 points, or 0.93 per cent, at 13,880.08. The Standard & Poor’s 500 Index was down 17.46 points, or 1.15 per cent, at 1,495.71. The Nasdaq Composite Index was down 47.93 points, or 1.51 per cent, at 3,131.17.