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US stocks end lower as Italy fears hit bank shares

By AFP 30 May 2018

Wall Street stocks fell Tuesday, with bank shares diving, as worries about Italian political turmoil sparked a selloff in leading global equity markets.

The Dow Jones Industrial Average finished with a loss of 1.6 percent, or more than 390 points at 24,361.45, recovering from the worst point of the session when the benchmark index lost 500 points.

The broad-based S&P 500 shed 1.2 percent to close at 2,689.86, while the tech-rich Nasdaq Composite Index fell 0.5 percent to 7,396.59.

The declines in US markets followed falls of more than one percent in leading European bourses as Italy’s caretaker prime minister ended talks on forming a government without unveiling his cabinet line-up, following the collapse of a populist coalition’s bid to govern.

“People are afraid that this creates more uncertainty about the future of Europe in general and the eurozone more specifically,” Karl Haeling of LBBW said of the Italian political crisis.

Haeling pointed to numerous other items on the global worry list, including ongoing trade frictions between the US and China, anxiety over the US pullout of the Iran nuclear deal and the chaotic back-and-forth between the US and North Korea over nuclear talks.

“Geopolitically, the world is a bit of a mess right now,” Haeling said.

Leading the declines were large banks, including JPMorgan Chase and Goldman Sachs, which lost 4.3 percent and 3.4 percent.

“If there are default fears across markets, banks will be on the front line and as a result are being repriced to consider that risk more now,” said Matt Miskin, market strategist at John Hancock Financial Services.

Miskin said the banks also were under stress due to speculation the Federal Reserve will lift interest rates less quickly than previously thought.

Other Dow companies with big drops included General Electric, down 3.1 percent, DowDuPont, down 2.7 percent, and Disney, which fell 2.4 percent after canceling the hit show “Roseanne” after star Roseanne Barr apologized over a racist joke on Twitter.

Monsanto gained 0.7 percent after the US Justice Department conditionally approved its takeover by German company Bayer after the companies agreed to major divestitures.

jmb/hs DM

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