NEW YORK: Stock prices fell around the globe yesterday as investors decided to take the money and run after a stunning 20-percent rally from lows earlier this month, while political strains punished the euro.
The euro suffered its biggest one-day loss against the dollar in more than two months after Germany’s finance minister said fiscal irresponsibility in Europe could put the currency at risk.
A stronger dollar hurt oil and gold. As has often been the case since the start of the economic crisis, the rising dollar also coincided with weakening stocks.
Profit-taking explained much of the slide in New York, Europe and Tokyo in the wake of what many suspect was just a bear-market rally. Whatever the case, the stock market may be in for a period of reassessment.
In early afternoon trading, the Dow Jones Industrial Average was down 110.87 points, or 1.40 percent, at 7,813.69.
The Standard & Poor’s 500 Index was off 11.16 points, or 1.34 percent, at 821.70. The Nasdaq Composite Index was down 25.87 points, or 1.63 percent, at 1,561.13. The MSCI world equity index had lost 1.73 percent by midday in New York.
European shares were down about 1 percent.
Despite slight losses on the day, Japan’s Topix index posted its biggest weekly gain since 1997 and the Nikkei average touched its highest point in more than two months yesterday. The benchmark Nikkei ended down 0.1 percent, or 9.36 points, at 8,626.97 after climbing as high as 8,843.18, its highest since Jan. 9.
The euro slid 1.76 percent to $1.3294 from a previous session close of $1.3532. Against the Japanese yen, the dollar was down 0.54 percent at 98.21 yen from a previous session close of 98.740.
In energy and commodities prices, US light sweet crude oil fell $2.46, or 4.5 percent, to $51.88 per barrel, and spot gold prices fell $10.25, or 1.1 percent, to $922.80. The Reuters/Jefferies CRB Index was down 4.39 points, or 1.93 percent, at 223.29.
A stronger dollar against the euro and easing stock markets helped pressure crude, along with a consultancy report of OPEC producing over the group’s output target in March.
In fixed-income markets, US Treasury debt prices rose for a second day as traders raised their bullish bets in hopes of profiting from the Federal Reserve’s purchases of government securities.
The Fed has embarked on a program to buy up to $300 billion over the next six months in an effort to ease credit conditions throughout the world’s largest economy.