European finance ministers approved $110 billion in rescue loans to Portugal, but have yet to decide on a second rescue package for Greece.
By DAVID K. RANDALL and MATTHEW CRAFT | AP Business Writers
Traders and specialists work on the trading floor of the New York Stock Exchange a short time after the beginning of trading on Monday. (AP Photo/David Karp)NEW YORK — Technology company troubles and renewed concerns about Europe's debt dragged stocks lower for a second day.
European finance ministers approved $110 billion in rescue loans to Portugal on Monday, but have yet to decide on a second rescue package for Greece.
The arrest of the head of the International Monetary Fund is expected to make solving Greece's problems more difficult. The official, Dominique Strauss-Kahn, had been heavily involved in trying to fix the debt crises in Portugal and Greece. He is being held without bail on charges of sexually assaulting a hotel employee in New York City.
Technology companies sustained the largest losses in Monday trading. Yahoo! Inc. and Amazon.com Inc. fell by more than 4 percent. Yahoo is in a dispute with Alibaba Group Holding Ltd. over its online payment business. Yahoo owns a 40 percent stake in the company, which transferred its online payment business to another company without consulting Yahoo.
Investors are growing increasingly concerned over the prospect of an unprecedented U.S. default on its debt. Treasury Secretary Timothy Geithner told Congressional lawmakers in a letter Monday that the agency is taking steps to postpone a default.
"The main thing hanging over most financial markets right now is what's going to happen with the debt ceiling and government borrowing and spending," said Tim Courtney, the chief investment officer at Burns Advisory Group in Oklahoma City.
The Dow Jones industrial average lost 47.38 points, or 0.4 percent, to close at 12,548.37. The Standard & Poor's 500 index fell 8.30 points, or 0.6 percent, to 1,329.47. The Nasdaq fell 46.16, or 1.6 percent, to 2,782.31.
Commodity prices were mostly lower. Oil prices fell $2.28 to settle at $97.37 a barrel Monday as worries eased that Mississippi River flooding could disrupt refineries and slow demand.
Commodities have been falling broadly over the last two weeks because of concerns that the global economy is showing signs of weakening. A series of margin-hikes that were meant to curb the influence of speculators, whose heavy trading sent commodities like silver up more than 11 percent for the year, have also sent commodities lower.
"People are coming back into the commodity markets because they think that, in the back of their minds, the global growth story will continue," said Zahid Siddique, an associate portfolio manager at Gabelli Equity Trust, a money manager based in New York.
The stock market has lost some of its momentum in the last few weeks after finishing its best first quarter since 1998. Companies in so-called defensive industries like health care, utilities and consumer staples have outperformed lately due in part to concerns that high gas prices will slow the economy and cut into corporate profits.
Two well-known retailers in the U.S. fell after reporting quarterly results Monday. Home improvement company Lowe's Cos. fell 2 percent in after its quarterly report missed Wall Street's estimates and the company cut its outlook for the year. Bad weather and a decline in consumer spending combined to drive its profit down 6 percent in the first quarter.
J.C. Penny Co. Inc. lost 1.5 percent despite raising its full year profit estimates.
One of the most talked-about deals on Wall Street was officially nixed as well. The parent company of the New York Stock Exchange dropped nearly 11 percent after competitors Nasdaq OMX Group and ICE announced that they had withdrawn their hostile bid for the company. NYSE Euronext had angered its shareholders by refusing to meet with the two companies, which offered a higher price than what NYSE received from a German exchange operator. The withdrawn offer clears one hurdle to the proposed combination of the NYSE and its German counterpart.
More than two shares fell for every one that rose on the New York Stock Exchange. Trading volume was 3.5 billion shares.