26/02/2013 - 06:54

US stocks tumble on Italy election concerns

26/02/2013 - 06:54


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 US stocks closed sharply lower on Monday amid concerns that Silvio Berlusconi's strong showing in the Italian election could force a coalition government and spark fresh instability in the eurozone.

The Dow Jones Industrial Average fell 216.40 points (1.55 per cent) to 13,784.17, the index's biggest single-day drop since November.

The broad-based S&P 500 lost 27.75 (1.83 per cent) to 1,487.85, while the tech-rich Nasdaq Composite Index sank 45.57 (1.44 per cent) to 3,116.25.

Equity markets rose early as the Italian election appeared heading for a centre-left victory.

But as the hours passed, a tight contest for control of the Italian Senate raised the possibility of a coalition including former premier Silvio Berlusconi.

Financial markets fear that his return to power could endanger Italy's recent fiscal reforms and revive doubts about the euro zone.

"There was a surprise over the Italian election," said Mace Blicksilver of Marblehood Asset Management.

Some analysts also expressed concerns about the effect of US budget cuts that could take effect Friday if an agreement in Washington is not reached.

Among the biggest losers were Bank of America (-3.7 per cent), Home Depot (-2.6 per cent) and General Electric (-2.5 per cent).

Home improvement retailer Lowe's sank 4.8 per cent despite reporting earnings that bested analyst expectations.

Natural gas giant Chesapeake Energy fell 6.8 per cent after it announced it was selling a stake in some natural gas properties to Chinese company Sinopec for $1.0 billion.

US shares of British oil giant BP dropped 3.4 per cent as a much-watched trial began Monday in New Orleans over the 2010 Gulf of Mexico oil spill.

Barnes & Noble surged 11.5 per cent after the company's founder and largest shareholder, Leonard Riggio, announced that he was interested in buying the company's retail assets.

Biopharmaceutical company Affymax lost 85.2 per cent after announcing a nationwide recall of an anemia treatment following serious hypersensitivity reactions in some patients.

Amgen, which sells a rival anemia drug, picked up 3.2 per cent.

Bond prices rose. The yield on the 10-year bond fell to 1.90 per cent from 1.97 per cent late Friday, while the 30-year fell to 3.09 per cent from 3.16 late Friday. Bond prices and yields move inversely.


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