Stocks on Wall Street fell sharply as fears that China is again tightening monetary policy combined with rising pressure on Greece's finances to kill the excitement over the Massachusetts Senate race that fuelled Tuesday's rally.China was reported to have
Stocks on Wall Street fell sharply as fears that China is again tightening monetary policy combined with rising pressure on Greece's finances to kill the excitement over the Massachusetts Senate race that fuelled Tuesday's rally.
China was reported to have asked banks to suspend lending for the rest of January, which weighed on global equity markets, helped push the US dollar higher and pummelled commodities.
The Dow Jones Industrial Average closed 122.28 points, or 1.1%, lower at 10,603.15, more than wiping out Tuesday’s gains and the biggest one-day drop in two months.
At one poiint during the session, the Dow was down 207 points but managed to claw its way back.
IBM was the Dow's worst performer, off 3.4%. The technology giant's fourth-quarter profit rose 8.7%, more than analysts had estimated, and it forecast 2010 earnings above the consensus estimate. But investors had higher expectations.
Kraft Foods fell 2.7%, also weighing on the Dow, after Warren Buffett, the company's biggest investor, gave a big thumbs-down to Kraft's deal to buy Cadbury for $US19.44 billion.
Bank of America was the Dow's only component in the black, as the banking giant's fourth-quarter report showed signs of stabilizing in its mammoth consumer loan books.
The S&P 500-share index was down 1.1% to 1138.04, with all its sectors in the red.
The tech-heavy Nasdaq Composite fell 1.3% to 2291.25.
European shares fell back from 15-month highs, with miners leading decliners on China's curb to its rampant growth. Rio Tinto fell 4.3% while coal and copper miner Xstrata fell 6.2%.
Worries about Greece's budget problems continued to hurt sentiment, sending its domestic sharemarket index down 3.4%.
In the major markets, the German DAX index lost 2.1% to 5851.53, the French CAC-40 index declined 2% to 3928.95 and the U.K. FTSE 100 index fell 1.7% to 5420.80
The pan-European Dow Jones Stoxx 600 index lost 1.5% to 256.46.
Commodities: Oil, gold down
Concerns of a tightening in China's monetary policy sent crude oil futures down.
Light, sweet crude for February delivery traded $US1.53, or 1.9%, lower at $US77.49 a barrel in New York. The February contract expires today. Brent crude on the ICE futures exchange traded $US1.40, or 1.8%, lower at $US76.23 a barrel.
February gold was down $US16.80 at $US1123.20 an ounce in New York.
Currencies; Dollar up, euro down
The euro fell to a five-month low versus the US dollar, which extended gains after data showing benign inflation and a rise in housing permits.
The euro fell to $US1.4106, down from $US1.4301 late on Tuesday, hitting its lowest level since mid-August.
The dollar was at ¥91.21 from ¥91.13, while the euro was at ¥128.51 from ¥130.34.
The UK pound was at $US1.6278 from $US1.6382.
