US stocks tumbled on Friday to close out the worst week since January as news of a criminal probe into Goldman Sachs unnerved investors already anxious about the prospects for heavy regulation from Washington.
US prosecutors in New York began an investigation into the investment bank, a source told Reuters, raising the possibility of criminal charges two weeks after the Securities and Exchange Commission accused the bank of fraud.
Goldman’s stock fell 9.4 percent to US$145.20, and the company has lost more than US$20 billion of its market value since the SEC charges were filed. The S&P financial index slid 2.5 percent.
“It’s scary, it’s taking down the whole market,” said Dave Rovelli, managing director of US equity trading at Canaccord Adams in New York. “We’re back in the uncertainty phase and whenever there is uncertainty, it’s never good.”
The Dow Jones industrial average fell 158.71 points, or 1.42 percent, to 11,008.61. The Standard & Poor’s 500 Index lost 20.09 points, or 1.66 percent, to 1,186.69.
The NASDAQ Composite Index dropped 50.73 points, or 2.02 percent, to 2,461.19.
This week’s losses, which took place against a backdrop of growing concerns over the potential for sovereign debt defaults in Greece, Spain and Portugal, cut short eight weeks of gains for the Dow industrials and the NASDAQ.
For the week, the Dow fell 1.2 percent, the S&P 500 lost 2.5 percent and the NASDAQ dropped 2.7 percent. The week was the worst since the week ending Jan. 24.
However, the three major US stock indexes have racked up gains for the last three months.
Stocks climbed last month, with a boost from strong earnings. So far, almost 80 percent of S&P 500 companies have beaten earnings estimates.
For last month, the Dow rose 1.4 percent, the S&P 500 gained 1.5 percent, and the NASDAQ climbed 2.6 percent.
In Friday’s session, a massive oil spill in the Gulf of Mexico continued to weigh on the market as investors worried about the potential economic and regulatory impact if the disaster escalates. The White House said it would halt new US offshore oil drilling until a review is conducted into the spill.
The PHLX oil services sector index fell 2.9 percent, with Halliburton Co off 3 percent at US$30.65 and Transocean Ltd down 7.7 percent at US$72.45.
US chip manufacturers’ shares slid after Samsung Electronics Co Ltd, the world’s largest maker of memory chips and flat-screen TVs, said that it would “substantially increase” capital spending this year, stoking fears about excess semiconductor supply.
The semiconductor index dropped 4.5 percent, dragged lower by Intel Corp, the world’s top chip maker, and Micron Technology, one of the world’s largest memory chip makers.
Intel fell 2.8 percent to US$22.84, while Micron Technology tumbled 8.4 percent to US$9.35. The stock of another chip maker, Advanced Micro Devices, lost 6.8 percent to US$9.06.
Shares of MEMC Electronic Materials Inc, which provides silicon wafers to semiconductor makers, plummeted 18.6 percent to US$12.97 a day after reporting worse-than-expected results. Two brokers cut their price targets on the stock and another investment firm cut its recommendation following MEMC’s results.
McAfee Inc shares tumbled 12.1 percent to US$34.75 a day after the security software maker said the cost of fixing a bug that shut down PCs at more than 100 large corporate customers will help push second-quarter earnings below expectations.
About 11.03 billion shares traded on the New York Stock Exchange, the American Stock Exchange and NASDAQ, above last year’s estimated daily average of 9.65 billion.
France’s nuclear-powered aircraft carrier and accompanying warships were in the Philippines yesterday after holding combat drills with Philippine forces in the disputed South China Sea in a show of firepower that would likely antagonize China. The Charles de Gaulle on Friday docked at Subic Bay, a former US naval base northwest of Manila, for a break after more than two months of deployment in the Indo-Pacific region. The French carrier engaged with security allies for contingency readiness and to promote regional security, including with Philippine forces, navy ships and fighter jets. They held anti-submarine warfare drills and aerial combat training on Friday in
COMBAT READINESS: The military is reviewing weaponry, personnel resources, and mobilization and recovery forces to adjust defense strategies, the defense minister said The military has released a photograph of Minister of National Defense Wellington Koo (顧立雄) appearing to sit beside a US general during the annual Han Kuang military exercises on Friday last week in a historic first. In the photo, Koo, who was presiding over the drills with high-level officers, appears to be sitting next to US Marine Corps Major General Jay Bargeron, the director of strategic planning and policy of the US Indo-Pacific Command, although only Bargeron’s name tag is visible in the seat as “J5 Maj General.” It is the first time the military has released a photo of an active
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
COORDINATION, ASSURANCE: Separately, representatives reintroduced a bill that asks the state department to review guidelines on how the US engages with Taiwan US senators on Tuesday introduced the Taiwan travel and tourism coordination act, which they said would bolster bilateral travel and cooperation. The bill, proposed by US senators Marsha Blackburn and Brian Schatz, seeks to establish “robust security screenings for those traveling to the US from Asia, open new markets for American industry, and strengthen the economic partnership between the US and Taiwan,” they said in a statement. “Travel and tourism play a crucial role in a nation’s economic security,” but Taiwan faces “pressure and coercion from the Chinese Communist Party [CCP]” in this sector, the statement said. As Taiwan is a “vital trading
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