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Monday, June 24, 2013

Sell, sell, sell on Wall Street Monday as Dow drops as much as 1.7%


12:25 pm by Deborah Bacal


As of just about noon ET, the Dow was down 239 points to 14,560, after hitting a day low of 14,551.27, while the Nasdaq shed 61 points to 3,296, and the S&P 500 lost 31 points to 1,561.

U.S. markets embarked on another sharp slide Monday as Shanghai stocks plummeted 5.3%, the worst percentage fall since 2009, on growing fears over a liquidity crunch in China, the world’s second-largest economy.

As of just about noon ET, the Dow was down 239 points to 14,560, after hitting a day low of 14,551.27, while the Nasdaq shed 61 points to 3,296, and the S&P 500 lost 31 points to 1,561.

In China, the Shanghai Composite index (SHA:CN:SHCOMP) plunged 5.3% to 1,963.24 as banking stocks slid on fears Beijing officials could be unwilling to ease the liquidity crunch, with the country's central bank saying that the nation's banks need to control liquidity better. On top of this, Goldman Sachs also downgraded its GDP growth forecasts for China to 7.4% and 7.7% for 2013 and 2014, respectively, down from 7.8% and 8.4%, previously.

In the U.S. Monday, the economic calendar was relatively quiet, with data kicking off on Tuesday, in a week set to be dominated by durable goods, new home sales, consumer confidence, pending home sales, and Chicago PMI, amid a heavy raft of Fed speakers that starts later today with Richard Fisher. Investors were thus left to focus Monday on China's dire straits, with the drama taking its toll on commodities, for which the country is a major consumer.

The sell-off today comes after a major rout for markets last week in the U.S. The Dow lost 1.8% last week after the Fed suggested that its bond buying could be slowed later this year with an eventual halt to the policy in the middle of 2014, while the Nasdaq finished down 1.9% and the S&P 500 lost 2.1%.

In corporate news Monday, Boeing (NYSE:BA) led the decliners in the Dow, falling almost 3% after its 787 Dreamliner nightmare continues, this time grounding one of its planes flown by United Airlines due to a brake problem. The jet, traveling from Houston to Denver, had to make an emergency landing, and returned to Texas.

In other news, Tenet Healthcare (NYSE:THC) has agreed to acquire Vanguard Health (NYSE:VHS) for about $1.63 billion, or $21 per share in cash - a 70% premium to Vanguard's closing price on Friday. Shares of Vanguard surged almost 69%.

Elsewhere, Vodafone (NASDAQ:VOD) shares edged down in the U.S. after it said it has agreed to acquire Kabel Deutschland (KBDHY.OB) for 7.7 billion euros in what will be the U.K. operator's largest acquisition since its entry into India in 2007.

Shares of Apple (NASDAQ:AAPL) lost 3.3% Monday after Jefferies cut its price target on the iPhone developer to $405 from $420 previously on the possibility of the company slowing iPhone production.

Meanwhile, according to a report in the Wall Street Journal, Google (NASDAQ:GOOG) has confirmed that the Federal Trade Commission is carrying out an antitrust review on its purchase of Waze, given Google's dominant position in the online/mobile maps market. Shares of Google shed 1.7% on Monday.

Commodities

Gold futures fell a further $12 to $1,280 an ounce Monday after closing down more than 6% last week, with Goldman Sachs also cutting its outlook on gold prices today for this year and next on an improving U.S. economy. The bank now expects gold to end the year at $1,300 a troy ounce, a 9.4% drop from its previous forecast, while it now sees the yellow metal finishing 2014 at $1,050 an ounce, a decline of 17.3% from its prior outlook.

Crude for July delivery lost 2 cents to $93.65 a barrel.

Europe

European markets finished sharply lower today with shares in France leading the region. The CAC 40 finished down 1.71% while Britain's FTSE 100 was off 1.42% and Germany's DAX fell lower by 1.24%.


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