US stocks tumbled on Friday to close out the worst week since January as news of a criminal probe into Goldman Sachs unnerved investors already anxious about the prospects for heavy regulation from Washington.
US prosecutors in New York began an investigation into the investment bank, a source told Reuters, raising the possibility of criminal charges two weeks after the Securities and Exchange Commission accused the bank of fraud.
Goldman’s stock fell 9.4 percent to US$145.20, and the company has lost more than US$20 billion of its market value since the SEC charges were filed. The S&P financial index slid 2.5 percent.
“It’s scary, it’s taking down the whole market,” said Dave Rovelli, managing director of US equity trading at Canaccord Adams in New York. “We’re back in the uncertainty phase and whenever there is uncertainty, it’s never good.”
The Dow Jones industrial average fell 158.71 points, or 1.42 percent, to 11,008.61. The Standard & Poor’s 500 Index lost 20.09 points, or 1.66 percent, to 1,186.69.
The NASDAQ Composite Index dropped 50.73 points, or 2.02 percent, to 2,461.19.
This week’s losses, which took place against a backdrop of growing concerns over the potential for sovereign debt defaults in Greece, Spain and Portugal, cut short eight weeks of gains for the Dow industrials and the NASDAQ.
For the week, the Dow fell 1.2 percent, the S&P 500 lost 2.5 percent and the NASDAQ dropped 2.7 percent. The week was the worst since the week ending Jan. 24.
However, the three major US stock indexes have racked up gains for the last three months.
Stocks climbed last month, with a boost from strong earnings. So far, almost 80 percent of S&P 500 companies have beaten earnings estimates.
For last month, the Dow rose 1.4 percent, the S&P 500 gained 1.5 percent, and the NASDAQ climbed 2.6 percent.
In Friday’s session, a massive oil spill in the Gulf of Mexico continued to weigh on the market as investors worried about the potential economic and regulatory impact if the disaster escalates. The White House said it would halt new US offshore oil drilling until a review is conducted into the spill.
The PHLX oil services sector index fell 2.9 percent, with Halliburton Co off 3 percent at US$30.65 and Transocean Ltd down 7.7 percent at US$72.45.
US chip manufacturers’ shares slid after Samsung Electronics Co Ltd, the world’s largest maker of memory chips and flat-screen TVs, said that it would “substantially increase” capital spending this year, stoking fears about excess semiconductor supply.
The semiconductor index dropped 4.5 percent, dragged lower by Intel Corp, the world’s top chip maker, and Micron Technology, one of the world’s largest memory chip makers.
Intel fell 2.8 percent to US$22.84, while Micron Technology tumbled 8.4 percent to US$9.35. The stock of another chip maker, Advanced Micro Devices, lost 6.8 percent to US$9.06.
Shares of MEMC Electronic Materials Inc, which provides silicon wafers to semiconductor makers, plummeted 18.6 percent to US$12.97 a day after reporting worse-than-expected results. Two brokers cut their price targets on the stock and another investment firm cut its recommendation following MEMC’s results.
McAfee Inc shares tumbled 12.1 percent to US$34.75 a day after the security software maker said the cost of fixing a bug that shut down PCs at more than 100 large corporate customers will help push second-quarter earnings below expectations.
About 11.03 billion shares traded on the New York Stock Exchange, the American Stock Exchange and NASDAQ, above last year’s estimated daily average of 9.65 billion.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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