Worries over tight regulation bring down U.S. stocks

09:25, May 19, 2010      

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Regulators in Europe and the United States proposed tighter rules on financial industry, which sent U.S. stocks lower across the board.

The U.S. Securities and Exchange Commission and financial exchanges are expected to formally introduce new rules to stop trading when markets plunge uncontrollably.

The SEC and executives of major exchanges had agreed on principles of protection measures, or the so-called circuit breaker, last week amid investigation on a market plunge on May 6, when Dow Jones industrial average nose-dived nearly 1,000 points in a brief moment.

Meanwhile, the German finance minister announced on Tuesday a ban of naked short selling from midnight in the country's 10 most important financial institutions. Naked short selling has been blamed for increased speculation in the market.

Currently an overhaul bill of financial regulation is being debated in the U.S. Senate. The bill is expected to get approved later this week or early next week.

The ongoing campaign for tighter regulation on financial industry has made investors worry and caused the U.S. stocks to give up early gains and tumble much lower.

As of market close on Tuesday, the Dow fell 114.88, or 1.08 percent, to 10,510.95. The Standard & Poor's 500 index lost 16.14, or 1.42 percent, to 1,120.80 and the Nasdaq tumbled 36.97, or 1.57 percent, to 2,317.26.

Technology sector was among the worst performers. Apple Inc. shares lost 1.86 dollars to 252.36 dollars. Intel Corporation shed 2.68 percent and Cisco Systems. Inc fell 2.04 percent.

Major indexes initially opened higher on a rebounding euro after Greece received the first installment of the bailout funds worth 17.9 billion dollars on Tuesday. But the euro gave up early gains and refreshed four-year lows against the dollar, as investors were concerned about the long-term economic prospect of the eurozone countries.

In economic data, the latest housing report painted a mixed picture and failed to bolster the market. According to the U.S. Commerce Department, housing starts rose 5.8 percent to a 672,000 annual rate in April, the highest since October 2008.

However, building permits, a sign of future construction, dropped 11.5 percent to the lowest level in six months, while economists had expected a drop of only 0.4 percent.

In corporate earnings, Wal-Mart Stores posted quarterly results that beat expectations, but the world's largest retailer said its second-quarter earnings could fall short of estimates as its shoppers remain under pressure.

Source:Xinhua

(Editor:黄蓓蓓)

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