US stocks drop as govt shutdown looms

by **hlk** Sat 09 Apr 2011, 11:45

NEW YORK: US stock markets fell Friday as a deadline loomed for
Democrats and Republicans to agree on budget cuts before the government
would have to shut down.

Markets started upward early in the day on optimism that a budget deal could be achieved before the midnight deadline.

But shares then fell steadily as no agreement was forthcoming, and
other news shunned earlier -- new two-year records for oil prices, and
highs in other commodities including gold -- came to the forefront.

The Dow Jones Industrial Average closed down 29.44 (0.24 per cent)
at 12,380.05, while the broader S&P 500 lost 5.34 (0.40 per cent) at
1,328.17. The Nasdaq Composite lost 15.73 (0.56 per cent) at 2,780.41.

"A further rally in oil prices dragged down airline stocks and lifted
energy companies," said Scott Marcouiller of Wells Fargo Advisors.

"A report that wholesale sales declined in February from January also weighed on sentiment," he added.

Transportation stocks were hit hard after oil prices continued their march upwards.

New York's main contract soared to US$112.79 -- a level last seen in
September 2008, and Brent North Sea crude for May delivery ended up
nearly US$3.98 at US$126.65.

American Airlines, and Alaska Air both fell 4.5 percent. Delta was
off 3.9 percent, and Southwest 1.0 percent. Railroads and shippers also
lost ground.

Google shares lost 0.3 per cent after it won regulator approval for
its US$700 million purchase of travel data firm ITA Software. Approval
was contingent on it making ITA's data available to other search-engine
operators.

Reports during the day also said that new chief executive Larry Page had begun to shake up the company's top management. -- AFP