Stocks Plunge Amid Uncertainty in Japan
NEW YORK (TheStreet) -- The Dow Jones Industrial Average shed more than 200 points at the close Wednesday, nearly erasing gains for 2011, as markets were once again pummeled by the unfolding crisis in Japan.
The Dow Jones Industrial Average finished down 242 points, or 2%, at 11,613 as the market struggled to get a clear picture of Japan's escalating nuclear power plant crisis. The S&P 500 lost 25 points, or about 2%, at 1,257, and the Nasdaq shed 51 points, or 1.9%, to 2,617. The Nasdaq and S&P have wiped out 2011's gains.
The Dow's drop of 2% Wednesday was the steepest since August 2010. Until today, the market had been more resilient despite a multitude of global crises. Last summer, when the market suffered drops of more than 2% on six days between May and July, as investors dealt with the prospect of sovereign debt defaults. The May 6 flash crash drove the Dow lower by 3.2%.
The equities selloff deepened after European Union Energy Chief Gunther Oettinger said Japan's nuclear plant crisis is "out of control."Oettinger made the comments at a European Parliament Committee meeting in Brussels. The EU energy commissioner's spokeswoman, however, later clarified that Oettinger did not have any special or extra information on the situation in Japan. Problems at Tokyo Electric Power's Fukushima Daiichi nuclear power plant continued to build on Wednesday. Radiation levels in the vicinity of the plant spiked, thwarting a plan to use helicopters to dump water to cool the power plant. Officials also said that pools used to store spent uranium fuel rods, which are highly radioactive, were also heating up, adding to the risks. Meanwhile, U.S. Energy Secretary Steven Chu told Congress that the United States is trying to deploy equipment in Japan that can detect radiation exposure at the ground level, Reuters reported. Responding to questions on whether he was satisfied with Japan's response to the crisis, Chu said, "I can't really say. I think we hear conflicting reports," according to the report. Stocks were already weak after February housing starts posted their largest drop in 27 years, and tensions in the Middle East put investors on edge. Oettinger's comments to expect "further catastrophic events," however, triggered a deeper selloff. Selloffs took place in the tech sector Wednesday amid several bellwether downgrades. Apple (AAPL) ended the trading session down 4.5% to $330.01 after the stock was downgraded to market perform from market outperform by JMP Securities analyst Alex Gauna, who cited risks associated with the deceleration with its primary manufacturing partner Hon Hai. Apple is also delaying the launch of the iPad 2 in Japan out of respect for the nation's crisis.
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