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US stocks slump to 2010 low

business Updated: Jun 08, 2010 08:46 IST

AFP
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US stocks tumbled on Monday to close at their lowest levels of the year as Wall Street was dogged by concerns of a jobless US recovery and the mounting European debt crisis.

The Dow Jones Industrial Average slumped 115.48 points (1.16 percent) to 9,816.49, adding to the blue-chip index's 3.0 per cent slide on Friday.

It was the Dow's lowest close since November 2009.

The tech-rich Nasdaq index lost 45.27 points (2.04 per cent) to 2,173.90 while the S&P 500 index, a broad measure of the market, slipped 14.41 points (1.35 per cent) to 1,050.47.

The key indexes oscillated between positive and negative territory before losses widened at the close of trading.

The market continued to be haunted by Friday's weaker-than-expected report on job creation in the United States.

The May employment report showed employers were still reluctant to hire new workers, heightening fears of a faltering economic recovery.

"The wounded sentiment from Friday's disappointing US jobs report and exacerbated euro-area debt crisis concerns are hamstringing the bulls," analysts at Charles Schwab & Co said in a statement.

Investors also kept an eye on the euro, which dipped below 1.19 dollars early Monday for the first time since March 2006.

It briefly changing hands at 1.1882 dollars before clawing back some ground.

"Today's mood is a somber one," said Briefing.com analyst Patrick O'Hare, citing lingering concerns over unemployment.

He said the May report showing little improvement in the private sector job situation "underscored the reality of an anemic employment situation that could endure for some time in spite of a broad economic recovery."

The report, which showed that private-sector jobs rose in May by just 41,000 or less than a fifth of the amount predicted by analysts, had also rocked European stock markets, adding to renewed concerns about eurozone public finances as Hungarian officials raised the prospect of a debt default.

"The uncertainty has infiltrated the markets, leaving participants wary of the risk trade," O'Hare said.

Among stocks in focus was Goldman Sachs, which fell 2.51 per cent to 138.68 dollars after a high profile panel investigating the causes of the financial crisis subpoenaed the Wall Street giant for failing to cooperate with the probe.

It is the latest controversy to bug the New York-based bank, already facing civil and potentially criminal charges for misleading investors.

Bank of America lost 3.39 per cent to 14.83 dollars after a top mortgage company bought by the bank was ordered to pay a 108-million-dollar penalty to settle claims it charged excessive fees to stricken homebuyers.

The penalty imposed on two mortgage servicing companies of Countrywide was one of the largest in the history of the Federal Trade Commission, a government consumer protection agency which brought the cases.

Bristol-Myers Squibb jumped 6.33 per cent to 23.86 dollars following reports that an experimental drug it produced extended survival in patients with deadly skin cancer.

Apple fell 1.96 per cent to 250.94 dollars after chief executive Steve Jobs said more than five million digital books had been downloaded since the IT giant began selling the iPad tablet computer two months ago.

Bonds were mixed. The yield on the 10-year US Treasury bond fell to 3.184 per cent from 3.195 per cent Friday while that on the 30-year bond climbed to 4.124 per cent against 4.119 per cent. Bond yield and prices move in opposite directions.