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Wall Street declines following China tumble

Stocks fell on Wednesday as a sell-off in Chinese equities diminished the appetite for riskier assets; a day after Beijing announced a measure to cool its heated stock market.

business Updated: May 31, 2007 03:43 IST

Stocks fell on Wednesday as a sell-off in Chinese equities diminished the appetite for riskier assets; a day after Beijing announced a measure to cool its heated stock market.

Shares of industrial conglomerates, including some with major business ties to China, led losses on the Dow industrials. Honeywell International Inc. fell 0.9 per cent to $56.83.

A steep fall in Chinese equities in late February set off a worldwide sell-off in stock markets.

"It will be interesting to see what the reaction is compared to February," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "Initially it seems like it's not going to react as badly. People remember how the market rebounded."

The Dow Jones industrial average was down 38.03 points, or 0.28 per cent, at 13,483.31. The Standard & Poor's 500 Index fell 4.06 points, or 0.27 per cent, at 1,514.05. The Nasdaq Composite Index was down 12.14 points, or 0.47 per cent, at 2,559.92.

Analysts said investors are likely to focus on the Federal Reserve's minutes from its previous interest-rate policy meeting, which will be released later on Wednesday, analysts said.

Among companies reporting results, Polo Ralph Lauren Corp posted a better-than-expected 17 per cent rise in quarterly profit, but its shares fell 2.2 per cent to $91.22 on its adjusted 2008 forecast.

The Chinese stock market's fall by 6.5 per cent followed the government's announcement of an increase in the tax on stock trading. It was the Chinese market's worst daily fall since the slide of February 27, which led to a 3.5 percent one-day drop in the Standard & Poor's 500.

The release of the minutes from the Federal Reserve's May policy-setting meeting is expected at 2 p.m. (1800 GMT), and investors will be looking for signs of whether the Fed will cut rates later this year or hold rates steady.