Wall Street Falls 2%, Intel Lowers Sales Outlook

Nichole Harper
12 Dec, 2011
New York City

U.S. indexes dropped nearly 2% after investors focused on the details of the fiscal compact that was agreed last week at the summit of the European Union nations. Market decline was accelerated after a rating agency said it will review sovereign debt ratings of EU nations.

[R]12:30 PM New York – U.S. indexes dropped nearly 2% after investors focused on the details of the fiscal compact that was agreed last week at the summit of the European Union nations. Market decline was accelerated after a rating agency said it will review the European nations’ sovereign debt rating. Metals and energy prices fell more than 2%.[/R]

Stocks in New York trading declined sharply after weak trading in European markets. The broader indexes dropped more than 1.7% in the morning trading after a rating agency said it will review sovereign debt rating of the European Union.

The mood in trading turned sour after investors focused on the immediate debt contagion and the lack of details to arrest the rising bond yields in the euro zone also contributed.

Investors now focus on the move from the European Central Bank as the peripheral euro zone nations are scheduled to raise as much as €90 billion a month in 2012. However, the central bank has still not increased its plan to buy more sovereign debt in the region that has stalled near €200 billion.

The S&P 500 index dropped 2% or 25.79 to 1,229.33 and the Nasdaq declined 1.9% or 54.84 to 2,592.27.

Banks and resources linked companies led the market decline and bond yields were on the rise in Europe.

Commodities also declined in the morning trading and energy and metals prices fell. Crude oil and natural gas prices in New York decreased more than 1.5% and gold dropped 2.9% or $49 to $1,667.80 per ounce.

Copper dropped 3% to $3.44 per pound and silver decreased $1.10 to $31.15.

Stock Movers

Banks in morning trading led the decliners in the New York trading. Bank of America fell 4%, JP Morgan Chase fell 3% and Morgan Stanley and Citigroup declined 5%.

Intel Corp declined 5% or $1.30 to $23.71 after the chip maker cut its fourth quarter revenue forecast on hard disk parts shortages that are linked to Thailand floods.

Intel lowered its fourth quarter revenues forecast to $13.7 billion with the margin of $300 million from the previous estimate of $14.7 billion with the margin of $500 million.

Applied Materials Inc declined 63 cents to $10.57 and Advanced Micro Devices decreased 5% to $5.25.

Chernier Energy Inc soared 5% to $10 after the Houston based liquefied natural gas company agreed to sell natural gas of 3.5 million tons a year to the state controlled Gail India Ltd for the next twenty years.

Diamond Foods Inc dropped 20% to $32.39 after the snack food maker refused to comments on its practice of payment and accounting to walnut farmers.

Vulcan Materials Co soared 21% to $40.37 after the concrete and aggregates maker received an offer from Martin Marietta Materials Inc for $36.69 a share or $4.7 billion.

Martin Marietta Materials, Inc increased 5% to $77.11.