Fri, November 26, 2010
Business > Markets

Materials shares lead Wall St down on euro debt woes

2010-11-26 15:59:00 GMT2010-11-26 23:59:00 (Beijing Time)

Commodity-related shares led U.S. stocks lower on Friday in a shortened post-holiday session, as investors shook off risky assets on worries that euro zone debt problems may continue to spread.

The U.S. dollar rallied while the euro slid to a new two-month low after a German newspaper reported that a majority of euro zone members and the European Central Bank were pressuring Lisbon to seek a bailout. Portugal and the European Commission denied the report.

The S&P materials sector (.GSPM) dropped nearly 1 percent as key base metals prices fell, pressured by the advancing greenback and after the Shanghai Futures Exchange raised margin requirements, prompting liquidation of speculative positions.

Freeport McMoRan Copper & Gold (FCX.N) dropped almost 2 percent to $98.76.

"The debt crisis in Europe is attracting a lot of dollar buyers, causing risk aversion," said Peter Cardillo, chief market economist at Avalon Partners in New York.

The Dow Jones industrial average (.DJI) fell 72.96 points, or 0.65 percent, at 11,114.32. The Standard & Poor's 500 (.SPX) was down 5.80 points, or 0.48 percent, at 1,192.55. The Nasdaq Composite Index (.IXIC) lost 5.95 points, or 0.23 percent, at 2,537.17.

More than 80 percent of the S&P 500 components traded lower.

Investors were further rattled after China warned against military acts near its coastline ahead of U.S.-South Korean naval exercises that North Korea said risked pushing the region toward war. The North shelled a South Korean island earlier this week.

Cardillo said the tense Korea situation is "very much alive" in investors' minds.

Consumer-related stocks were in focus as Black Friday, the time of year when retailers turn a profit. kicked off what could be the strongest holiday shopping season in three years.

"From every indication we've gotten so far in consumer spending, I think the consumer will be out there, and it will be a good holiday season" for retailers, said Cardillo.

Still, retail shares were sluggish. Discount retailers Wal-Mart Stores Inc (WMT.N) dipped 0.4 percent at $53.82 and Target Corp (TGT.N) fell 0.7 percent to $56.86, while Macy's Inc (M.N), operator of its namesake retail chain and upscale Bloomingdale's, edged 0.3 percent lower to $25.95.

Del Monte Foods Co (DLM.N) rose 4.2 percent to $18.75 a day after the company agreed to a buyout led by Kohlberg Kravis Roberts & Co (KKR.N).

Volume was very light at midmorning, with U.S. stock markets set to close at 1 p.m. EST (1800 GMT) following the U.S. Thanksgiving holiday on Thursday.


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