Energy shares drag Wall Street to biggest percent drop since March 16

09:07, May 12, 2011      

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The Wall Street hit its biggest percent drop since March 16 on Wednesday as energy and material stocks suffered from a sell-off in commodities market. All three major indexes dropped around 1 percent at the close.

Crude plummeted more than 5 percent to below 100 U.S. dollars a barrel Wednesday after a U.S. government report showed crude and gasoline inventories rose more than expected, dragging equities sharply lower while driving investors to the dollar for safe haven.

Moreover, traders pointed out that it was more expensive to speculate in energy commodities as the CME Group raised its margin requirements this week.

The energy and basic material sectors led the laggards on Wednesday, dropping over 2.34 percent and 2.38 percent respectively.

Investors are also concerned that global inflation might hurt U. S. economic recovery after China's consumer price index (CPI) rose 5.3 percent in April from a year ago.

Meanwhile, the Wall Street focused on the inside trading charges on Wednesday. Galleon Group hedge fund founder Raj Rajaratnam was found guilty on all 14 conspiracy and securities fraud charges of insider trading on Wednesday. Investors thought that it might raise tougher market regulation in future.

As of shares, Walt Disney Co. was down 5.44 percent, after it posted late Tuesday the second-quarter profit fell 1.2 percent, much lower than estimates.

Macy's Inc. reported a higher quarterly profit outlook as middle-class consumers increased spending. Macy's shares jumped 7. 71 percent.

American International Group and the U.S. Treasury will sell about 9 billion dollars in AIG stock. AIG stock rose 3.48 percent. The Dow Jones industrial average shed 130.33 points, or 1.02 percent, to 12,630.03. The Standard & Poor's 500 lost 15.08 points, or 1.11 percent, to 1,342.08. The Nasdaq Composite Index dropped 26.83 points, or 0.93 percent, to 2,845.06.

Source: Xinhua
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