January 17, 2018
Thursday, June 12, 2014

Wall Street slides on concerns about Iraq

US stocks fell today as concerns escalated about Iraq and after disappointing economic data on retail sales and jobless claims.

The three major US stock indexes ended off their session lows. With the day's decline, though, the S&P 500 was down for three straight sessions for the first time since early April.

The Dow Jones industrial average lost more than 100 points for the second day in a row.

Hours after ethnic Kurdish forces took control of the oil hub of Kirkuk after the Shi'ite-led government's troops abandoned their posts, President Barack Obama was asked if he might order drone strikes or other action to halt the insurgency that has seized much of northern Iraq this week.

Obama told reporters that he refused to rule out US action in Iraq against Sunni Islamist militants who have surged out of the north toward Baghdad, threatening to divide the country and establish their own jihadist state.

The stock market's losses quickly accelerated following Obama's comments, with industrials and consumer discretionary sectors leading the decline.

The CBOE Volatility Index or the VIX, Wall Street's "fear gauge," shot up 8.3 percent to end at 12.56.

The Dow Jones industrial average fell 109.69 points or 0.65 percent, to end at 16,734.19. The S&P 500 slid 13.78 points or 0.71 percent, to 1,930.11. The Nasdaq Composite dropped 34.30 points or 0.79 percent, to 4,297.63.

The Dow touched an intraday low at 16,703.73, while the S&P 500 fell as low as 1,925.78, and the Nasdaq slid to a session low at 4,284.528.

Energy shares ranked among the few gainers. The S&P energy sector index was up 0.3 percent.

European equities closed near recent multi-year highs, as merger hopes buoyed some telecom stocks while mining shares fell amid global growth concerns.

The FTSEurofirst 300 index of top European shares finished flat at 1,392.02 points, just below this week's 6 1/2-year high.

Iliad rose 6.3 percent, the top gainer on the FTSEurofirst index, and Bouygues advanced 5.2 percent on expectations of more consolidation among French telecom companies.

Economy Minister Arnaud Montebourg said the government still wants to reduce the number of mobile telecom operators in France to three from four, to end the "destructive spiral" of falling prices.

"Consolidation is a good thing for the sector as it improves their market power and pricing, which has been a key issue holding back earnings in the sector," Macquarie strategist Daniel McCormack said.

Gains by some shares were offset by a decline in mining shares related to concerns about the global economic outlook. Copper prices have slid towards one-month lows.

Meanwhile, Japan's Nikkei share average fell to a 1 1/2-week low after the World Bank's downward revision of its global growth forecast soured sentiment.

The Nikkei ended 0.6 percent lower to 14,973.53, the lowest closing level since June 2. The World Bank cut its global economic growth forecast for 2014 to 2.8 percent from 3.2 percent because of the harsh US winter and the impact of the Ukraine crisis.

The broader Topix slid 0.1 percent to 1,237.75, and the new JPX-Nikkei Index 400 declined 0.1 percent to 11,267.97.

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