Dow slipped below 10,000

US stocks fall as China reviews holdings
May 27, 2010 - 7:06AM

Wall Street staged yet another late-day reversal on Wednesday to end lower as news suggesting China was reassessing its euro-zone debt holdings pushed investors into profit-taking mode.

The Dow slipped below 10,000, with the late turnaround in stocks showing investor psyche remains fragile, and investors are inclined to sell strength in this volatile rumor-driven market.

The Financial Times said representatives of China's State Administration of Foreign Exchange, which manages the reserves under the country's central bank, has been meeting with foreign bankers in Beijing in recent days to discuss the issue.

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"There is still nervousness out there. Yesterday's turnaround does not mean the market correction is over or that investors are confident about the direction of European policy or the success of European policy," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

The S&P 500 has fallen more than 10 percent from a closing high on April 23, putting the benchmark index into correction territory.

Large-cap liquid holdings, including Microsoft Corp and McDonald's Corp, led the Dow lower as the software giant's stock dropped 4.1 per cent to $US25.01 and the fast-food restaurant operator lost 2.7 per cent to $US66.01. At the same time, Apple Inc, which shed 0.5 per cent to $US244.11, managed to surpass Microsoft to become the second- largest company in market cap behind Exxon Mobil Corp.

The Dow Jones industrial average dropped 69.30 points, or 0.69 per cent, to 9974.45. The Standard & Poor's 500 Index fell 6.08 points, or 0.57 per cent, to 1067.95. The Nasdaq Composite Index lost 15.07 points, or 0.68 per cent, to 2195.88.

Late-day volatility has been a hallmark during the recent slide on Wall Street, with investors quick to pull the trigger at the slightest provocation. On Tuesday, Wall Street staged a furious rally toward the end of trading to reverse initial declines of more than 3 per cent.

"It really seems like the same old thing," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.

"This is the kind of intraday volatility that we will be seeing continuously."

Earlier in the session, data showed sales of new US homes hit their highest level in nearly two years in April as buyers rushed to take advantage of an expiring government tax credit.

The Dow Jones US Home Construction Index added 0.3 per cent, while the PHLX Housing Sector Index edged up 0.2 per cent.

Luxury home builder Toll Brothers Inc gained 0.8 per cent to $US20.78 after it said its quarterly loss narrowed from the previous year.

Elsewhere on the economic front, orders for durable goods rose in April to their highest level since September 2008.

Volume was solid, with about 12.44 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq -- well above last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the New York Stock Exchange by a ration of about 3 to 2, while on the Nasdaq, nearly five stocks rose for every four that fell.

Reuters