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Wall St shares slump in early trading

Thursday, July 31 15:31:58

U.S. stocks slumped in a broad decline today, with the Dow and S and P 500 turning negative for July on concerns over the strength of overseas economies and ongoing tensions with Russia.

Weak U.S. data contributed to the bearish tone as jobless claims rose more than expected in the latest week, and the Chicago Purchasing Managers Index unexpectedly fell in July to its lowest since June 2013.

All ten primary S and P 500 sectors were down on the day, with energy the biggest decliner with a drop of 0.9 percent. About 82 percent of stocks traded on the New York Stock Exchange fell, while 74 percent of Nasdaq-listed shares were lower.

The CBOE Volatility index rose 8.3 percent to 14.44, well under its historical average of 20.

Portugal's Banco Espirito Santo slumped almost 40 percent to an all-time low as its hopes of raising capital without state aid suffered a major blow after massive losses.

In Russia, Moscow fought back over new U.S. and EU sanctions that had been imposed over the conflict with Ukraine, announcing a ban on most fruit and vegetable imports from Poland.

Separately, Argentina defaulted for the second time in 12 years. Investors had hoped for a midnight deal with holdout creditors in Argentina, but the plan fell through. Even a short default will raise companies' borrowing costs, add to pressure on the peso, drain dwindling foreign reserves and fuel one of the world's highest inflation rates.

"Even though the default wasn't terribly unexpected, it creates a concern of systemic risk," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania. "On top of that, we haven't had any real downside for a while, and anyone who tries to argue that the market isn't at the very upper end of its historical range is flawed."

Argentinian stocks traded in the U.S. were lower, including YPS SA, down 4.9 percent to $37.03 and Pampa Energy , down 8.8 percent to $10.32.

The Dow Jones industrial average fell 122.34 points or 0.72 percent, to 16,758.02, the S and P 500 lost 14.79 points or 0.75 percent, to 1,955.28 and the Nasdaq Composite dropped 38.81 points or 0.87 percent, to 4,424.09. (Reuters)

For more visit: www.businessworld.ie