Wall Street falls on fears of slowdown in economy

Dow Jones: 11,897.27 (–178.84) Nasdaq: 2,631.46 (–47.26) S&P 500: 1,265.42 (–22.45)US STOCKS fell yesterday, threatening the 2011 gain for the Standard and Poor's 500 Index, on concern Greece will default and signs the American economy is cooling down.

Wells Fargo and Bank of America slid at least 1.7 per cent, following losses in European lenders, as officials failed to agree on a rescue plan for Greece.

Alcoa and Exxon Mobil sank more than 2.1 per cent as commodities slumped.

Steelmaker Nucor issued a forecast that missed Wall Street’s expectations, and its shares fell 2.2 per cent to $39.80.

Shares of Owens Illinois, the world’s largest maker of glass bottles, tumbled 13.5 per cent to $25.54 after the company cut its second-quarter outlook.

US automaker Ford lost 2.1 per cent to $13.15.

The Morgan Stanley Cyclical Index of companies most tied to the economy fell 2 per cent on lower-than-forecast data on manufacturing, industrial output and homebuilder confidence.

The Dow Jones industrial average dropped 178.84 points, or 1.48 per cent, to 11,897.27.

The Standard & Poor’s 500 Index lost 22.45 points, or 1.74 per cent, to 1,265.42.

The Nasdaq Composite Index slid 47.26 points, or 1.76 per cent, to 2,631.46.

“It’s a classic ‘risk-off’ day,” said Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial. “They keep talking about kicking the can down the road in Europe. The can is getting heavier and heavier. The dollar-euro trade is on. The economy is in a slow patch. We suspect that weaker economic data should help curtail the march higher in commodities.”

Stocks from Hong Kong to London and Sao Paulo slumped yesterday as European officials failed to agree on a rescue plan for Greece.

Greek prime minister George Papandreou said he will make changes to his cabinet today and will then seek a vote of confidence in Parliament.

The European Central Bank said the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability.

“Greece could have a contagion effect,” ECB vice president Vitor Constancio said. – (Bloomberg/ Reuters)