U.S. stocks sank deeper into the red on Wednesday after the European Union’s energy chief warned of “possible catastrophic events” at Japan’s nuclear plants.
Swinging in choppy trading, the Dow Jones Industrial Average tumbled 99 points, or 0.8 percent, to 11756, with all but two of its 30 components in the red.
The Nasdaq Composite sank 0.8% to 2646, dropping into negative territory for the year. The Standard & Poor’s 500-stock index dropped 0.7% to 1273, with only the energy sector posting slight gains.
Stocks deepened modest losses on Wednesday after Guenther Oettinger, the European Union’s commissioner for energy, told a European Parliament committee that a nuclear power plant in Japan is “effectively out of control,” and that the situation could continue to deteriorate.
“In the coming hours there could be further catastrophic events which could pose a threat to the lives of people on the island,” he said.
Traders said the remarks fanned anxieties simmering in the market.
“I think it’s this word of a catastrophic nuclear event–we’re still sniffing out,” said Joseph Saluzzi at Themis Trading LLC. “In this type of market this news moves quickly–flash crash type stuff.”
The market gradually pared its losses as traders digested the remarks as analysis, rather than breaking news.
“We were slightly negative in the stock market, but it wasn’t the end of the world. And then an energy expert or official in the EU says, ‘Hey, the situation in Japan is out of control,’” said Jeffrey Friedman, senior market strategist at Lind-Waldock, a division of MF Global. “I thought it was a bad way to go–a guy in Europe saying it’s out of control with no specifics. Everybody’s kind of nervous, we’re not getting enough specific information out of Japan, and then this guy comes out with a statement, how do you take it? ‘Out of control’ from what–two days ago, four days ago, a development in the last 15 minutes?”
Stocks had already posted modest losses on Wednesday after housing starts showed the steepest monthly drop in nearly 27 years and new building permits set a record low, an indication that the battered sector continues to be a source of weakness for the economy.
In the Middle East, Bahraini security forces carried out a crackdown on protester strongholds in Pearl roundabout and the financial district of the capital Manama early Wednesday, a day after the island’s king declared emergency law.
Housing stocks were lower after the disappointing home construction data; PulteGroup fell 0.7%, Lennar dropped 1.4% and Toll Brothers lost 0.8%.
Rambus added 5% after the technology company said Toshiba has renewed a five-year licensing agreement.
Trucking company YRC Worldwide’s stock plunged 20% after the company said in a filing with the Securities and Exchange Commission that it missed a deadline in its restructuring process and noted a possibility of seeking bankruptcy protection.
Teen retailer Pacific Sunwear slumped 15% after the company projected a larger-than-expected loss for the current quarter.
Insurer Ace rose 0.5% after the company said it expects first-quarter after-tax losses related to the Japanese earthquake to range between $200 million and $250 million.
Weatherford fell 0.8% after the oilfield services company blamed disruptions in the Middle East and North Africa and weather-related issues as it cut its first-quarter earnings projection.
Demand for Treasurys was higher, with the yield on the 10-year note falling to 3.28%.
In separate U.S. data Wednesday morning, wholesale prices surged last month on the back of higher energy and food prices, but underlying producer prices increased only moderately. A third data release showed exports of oil and food by the U.S. helped narrow its current-account deficit at the end of 2010.
