Stocks turn sharply lower in late trading on announcement of BP investigations; Dow falls 113
NEW YORK – NEW YORK (AP) — Stocks took another late-day dive Tuesday after the government said it was starting criminal and civil investigations into the Gulf of Mexico oil spill.
The Dow Jones industrial average dropped 112. Its plunge came shortly before the close and minutes after Attorney General Eric Holder made the announcement. Stocks in energy companies and oil service providers tumbled on the news, and other stocks followed.
Holder would not say which companies or individuals might be under investigation. But investors quickly dumped stocks across the energy industry. BP PLC, which operated the rig that caused the spill, fell almost 15 percent. Oil services company Anadarko Petroleum Corp. fell almost 20 percent, and competitor Halliburton Inc. fell almost 15 percent.
Analysts have said the oil spill has been among the many issues nagging at investors in recent weeks. Among the fears in the market is the potential economic impact of the spill. But Tuesday's announcement raised the possibility that oil companies might have to pay out huge amounts in fines, or see their operations affected by a government investigation.
Trading was choppy for much of the day before Holder's announcement, a sign that investors weren't sure where to put their money. Investors were juggling worries about Europe's debt problems with upbeat reports on U.S. manufacturing and construction.
Europe's economic issues were again a drag on the market. The euro slid as low as $1.2112, its lowest level since April 2006, before climbing back to $1.2298. The euro's moves against other currencies have come to reflect traders' confidence in Europe's ability to manage a sovereign debt crisis that started in Greece but has started to affect other European nations like Portugal and Spain.
Stocks did get some support from two upbeat economic reports. The Commerce Department said construction spending rose by the biggest amount in nearly a decade. The 2.7 percent April gain was the largest since August 2000. Economists forecast spending would be flat. However, homebuilders' stocks fell although the report showed a big jump in residential building. That blip upward was expected to disappear now that a homebuyers' tax credit has expired.
Meanwhile, the Institute for Supply Management said its manufacturing index fell to 59.7 in May from 60.4 in April. The figure was better than economists' forecast of 59.
"As long as they continue to go on the positive side, I think it will overshadow what's going on in Europe," said Charles Massimo, president of CJM Fiscal Management in Melville, N.Y.
According to preliminary calculations, the Dow fell 112.61, or 1.1 percent, to 10,024.02. The Standard & Poor's 500 index fell 18.70, or 1.7 percent, to 1,070.71, while the Nasdaq composite index fell 34.71, or 1.5 percent, to 2,222.33.
More than two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1.43 billion shares. Volume was light because some traders are away for a long Memorial Day holiday. Light volume can intensify swings in the market.