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NEW YORK: Cautious traders pushed US stock prices lower on Tuesday in a muted reaction to a deadly swine flu outbreak, while General Motors rallied on hopes its new overhaul plan would avert bankruptcy.
In a choppy session featuring swings in both directions, the Dow Jones Industrial Average fell 51.29 points (0.64 percent) to close at 8,025.00.
The Nasdaq composite lost 14.88 points (0.88 percent) to 1,679.41 and the broad-market Standard & Poor's 500 index shed 8.72 points (1.01 percent) to 857.51.
The markets tried to assess the impact of the swine flu outbreak that has killed up to 149 people in Mexico and appeared to be spreading across continents.
The outbreak "is certainly serving as an effective profit-taking catalyst," said Patrick O'Hare at Briefing.com.
David Kotok at Cumberland Advisors said he expects "the flu to be a negative shock that comes on top of an already-weakened economic and financial system."
The US market's losses were limited as traders kept calm despite heavy selling in other bourses, according to Jon Ogg at 24/7 Wall Street.
"Many traders feel this is a notion that will pass as a footnote rather than as a catastrophe," he said.
The market opened weaker but steadied after GM unveiled an accelerated overhaul with deeper job and production cuts and a debt swap that would grant effective control of the ailing automaker to the US government and its main union.
The new plan, which also calls for an end to the Pontiac brand, aims to get out of a crushing debt burden by converting much of that to stock - a move that would give a combined 89 percent of GM shares to the US Treasury and the United Auto Workers (UAW) union.
"Our objective is to create an operating structure and strategy where we can win, not simply survive," said GM chief executive Fritz Henderson.
GM shares surged 20.7 percent to 2.04 dollars even though existing shareholders would be left with just one percent of the company under the plan.
Ford, which last week said its restructuring was on track, rose 2.0 percent to 5.11 dollars.
The flu outbreak hurt the travel sector while boosting pharmaceuticals.
Among pharmaceutical firms, Pfizer rose 2.33 percent to 13.49 dollars. US-traded shares of GlaxoSmithKline, maker of antiviral flu drugs, rallied 7.6 percent to 31.56 dollars.
American Airlines parent AMR slumped 13.3 percent to 4.70 dollars and Delta Air Lines slid 14.2 percent to 6.76.
Bonds firmed as part of the flight to quality. The yield on the 10-year US Treasury bond fell to 2.921 percent from 2.996 percent on Friday while that on the 30-year bond eased to 3.838 percent from 3.876 percent. Yields and prices move in opposite directions.
Other markets were mixed.
In London the FTSE 100 index rose 0.27 percent to finish at 4,167.01, while in Paris the CAC 40 was down just 0.01 percent at 3,102.43. The Frankfurt Dax added 0.42 percent to finish at 4,694.07.
Latin American shares were hit hard as Mexico's Bolsa slumped 3.34 percent and Brazil's Bovespa dropped 2.04 percent.
In Asia, Hong Kong share prices closed 2.74 percent lower while Shanghai slumped 1.77 percent, with food producers leading the decline in response to the swine flu outbreak, dealers said. - AFP/de
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