Wall Street took a tumble today on renewed concerns about the financial sector and FedEx's warning that weakening demand and surging fuel...
NEW YORK — Wall Street took a tumble today on renewed concerns about the financial sector and FedEx’s warning that weakening demand and surging fuel costs would weigh on profits in the coming year.
The Dow Jones industrial average fell 131.24 to 12,029.06. The index briefly fell below 12,000 before recovering. The index hadn’t traded below the 12,000 mark since March 18 and last closed below that level on March 17. The Dow’s decline follows its loss of more than 100 points on Tuesday.
Microsoft, one of the 30 Dow stocks, fell 34 cents to close at $28.46 a share. Boeing, also a Dow stock, gained 27 cents to $74.65.
Broader stock indicators also pulled back today. The Standard & Poor’s 500 index fell 13.12 to 1,337.81, and the Nasdaq composite index fell 28.02 to 2,429.71.
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Unease about financials arose after several worrisome developments. Fifth Third Bancorp said it plans to cut its dividend by nearly two-thirds, raise $1 billion through an offering of preferred stock and generate another $1 billion through the sale of businesses.
MF Global predicted that tight credit spreads will weigh on its fiscal first-quarter earnings. The futures and options broker said it plans to sell $300 million in convertible securities to help pay down a loan due this year.
And although Morgan Stanley reported a slightly better-than-expected fiscal second-quarter profit, earnings at the nation’s second-largest investment bank were still down 61 percent from a year earlier on declining revenue.
Earlier, FedEx forecast that earnings for the fiscal year that began this month will fall well short of what Wall Street had been expecting. The shipper’s prediction serves as the latest sign that oil prices, which have nearly doubled in the past year, are exacting a burdensome tax on businesses and consumers alike.
“I think the news out of FedEx today really is starting to make people second guess some of the optimism that had been brewing over the last few weeks,” said Craig Peckham, market strategist at Jefferies & Co. in New York.
“The financials are getting hit. There just isn’t anything to spark interest in buying,” said Ron Kiddoo, chief investment officer for Cozad Asset Management. He said that investors are finding it difficult to set aside worries about when the economy might show signs of strengthening.
Overseas, Japan’s Nikkei stock average rose 0.7 percent. Britain’s FTSE 100 fell 1.8 percent, Germany’s DAX index declined 1 percent, and France’s CAC-40 fell 1.4 percent.