A rebounding dollar and persisting worries about the economy kept investors on a wait-and-watch mode and stocks fell broadly as weakness in energy shares, precipitated by reports of flush U.S. reserves, weighed on sentiments. In a broad based decline, major stock indexes fell about 1% from their 13-month highs.
The strength in US dollar, based upon its safe-haven appeal, undermined investors’ appetites for riskier, high-yielding assets such as equities as upside guidance from DJIA components Wal-Mart and Hewlett-Packard failed to stem the retreat.
The Dow Jones industrial average fell 94 points, or 0.9%, to close at 10,197.47. The S&P 500 retreated 11 points, or 1%, to close at 1,087.24, after climbing to an intraday high of 1,101.97. The tech-heavy Nasdaq composite index retreated 18 points, or 0.8%, to settle at 2,149.02. On the New York Stock Exchange, declining issues outpaced those that advanced in price by a four-to-one margin as volume slowed to 828 million shares.
Twenty-six of the thirty Dow average components ended lower, with energy and financial shares leading the decliners. The CBOE Vix volatility gauge jumped 5.21% to 24.24. Gold prices fell $8 to $1106.60.
On the S&P 500, shares of financial companies were the second-steepest decliners among the 10 industry groups, falling 1.8%. Bank of America (NYSE:BAC) dropped 2.3% to $16.06 and JPMorgan Chase (NYSE:JPM) fell 2.3% to $43.30. Energy shares slumped 2% and led the decliners among 10 groups. The falling shares wiped off an earlier advance in tech shares that was fueled by Hewlett-Packard Co.’s (NYSE:HPQ) takeover of 3Com Corp. (NASDAQ:COMS).
Meanwhile, the US Treasury said budget deficit widened to $176.4 billion in October, the largest October shortfall on record and the fifth largest monthly deficit ever. Economists had expected a $150 billion shortfall.
