Wall Street falls with S&P 500, Nasdaq erasing 2011 gains

11:13, March 17, 2011      

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The U.S. stocks fell on Wednesday on Japan's nuclear disaster and lower-than-expectation economic reports, with the Standard & Poor's 500 Index and the Nasdaq erasing their gains for the year.

All three major indexes ended at their lowest levels of 2011. The Dow Jones industrial average lost 242.12 points, or 2.04 percent, to 11,613.30. The Standard & Poor's 500 Index was down 24. 99 points, or 1.95 percent, to 1,256.88. The Nasdaq declined 50.51 points, or 1.89 percent, to 2,616.82.

The sharp decline on Wednesday began after European Union Energy Commissioner Guenther Oettinger said that Japan's nuclear plant was effectively out of control.

"In coming hours there could be further catastrophic events which could pose a threat to the lives of people on the island," European media quoted Oettinger as saying.

The economic reports on Wednesday were not as good as expected as well. The U.S. Commerce Department posted that new home construction dropped to the second lowest level on record in February.

Investors believed that the reading was reflecting a slightly weak demand. D.R. Horton Inc., a home construction company, fell 2. 26 percent.

Meanwhile, wholesale prices increased last month by the most in nearly two years because of higher energy costs and the biggest increase in food prices in 36 years.

Investors began to worry about the possible inflation risks and stocks of relevant companies dropped. McDonald's Corp. fell 2.32 percent and Starbucks Corp. fell 2.02 percent.

Moreover, also because of the worsening situation in Japan, the dollar slumped to a four-month low of 79.84 against the yen in late trading session, just few steps away from the all-time low of 79.75 set on April 19, 1995.

Treasury prices jumped, sending yields to their lowest levels this year as investors piled into investments seen as being more stable.

Crude prices on Wednesday, however, rebounded from a three-week low after a fluctuating trading day as concerns about unrest in the Middle East lifted the prices, despite worries about Japan's nuclear crisis.

Source: Xinhua
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