December 8, 2023

Wall Street Slides as Nuclear Crisis in Japan Worsens

Japan’s nuclear safety agency raised the severity of the Fukushima Daiichi nuclear plant incident by two notches to level 7, the highest on the scale and the same rating as the Chernobyl incident in 1986. The move, along with continuing earthquake aftershocks which have interfered with recovery work, sent ripples of unease through markets.

“It means slower growing coming out of Japan in the short term, and that’s going to weigh on global growth,” said Peter Cardillo, chief market economist at Avalon Partners Inc.

Japan’s Nikkei 225 index fell 1.7 percent. The British FTSE 100 index, French CAC-40 index and German DAX index all dropped 1.4 percent or more.

On Wall Street, the Dow Jones industrial average was down 119.35 points, or 1 percent, while the broader Standard Poor’s 500-stock index lost 11.76 points, or 0.9 percent. The technology heavy Nasdaq lost 26.96 points, or 1 percent.

The energy industry fell the most of the 10 sectors that make up the S. P. 500 index. It dropped 3.5 percent, more than double the percentage loss of any other group, after oil prices fell 3.7 percent to $105.91 a barrel. Goldman Sachs, which had been bullish on oil prices, surprised the market with a report early Tuesday saying it now expects a “substantial pullback.”

Alcoa started earnings season late Monday by saying it returned to a first-quarter profit. But it also said its revenue grew to just $5.96 billion from $4.89 billion. Analysts expected bigger growth, to $6.16 billion, according to FactSet. Alcoa’s stock dropped 5.2 percent in early trading.

The aluminum company was the first blue-chip to report first-quarter results, and analysts are expecting to see revenue growth from companies over all. Much of the earnings growth so far this recovery has come from cutting jobs and other costs, rather than from demand growth.

Other big companies reporting results this week include JPMorgan Chase, Google and Bank of America.

In other news, the Commerce Department said the trade deficit fell 2.6 percent to $45.8 billion in February, after the country imported less oil and fewer automobiles.

Investors are also concerned that the global recovery is slowing amid high oil prices, as illustrated by economic figures out of Britain and Germany. The International Monetary Fund also downgraded its 2011 growth forecast for the United States, Japan and Britain — three of the world’s top seven industrial countries — largely because of higher oil prices.

In the bond market, debt-heavy Greece managed to borrow 1.62 billion euros ($2.34 billion) in short-term loans at an interest rate that was marginally higher than in a similar debt auction last month.

The auction of 26-week bills had an interest rate of 4.8 percent, slightly above the 4.75 percent at a similar sale in March, Greece’s public debt management agency said.

The agency had originally been seeking to raise 1.25 billion euros, but borrowed more as investor interest was strong — the auction was 3.81 times oversubscribed, compared with 3.59 times in March.

As Athens struggles with its tough savings goals, the president of the European Union, Herman Van Rompuy, warned that Greece had no option but to stick with its long-overdue economic overhaul.

“The key is to continue implementing the courageous reforms and privatizations that have been agreed in a timely and effective manner,” Mr. Van Rompuy told reporters after talks in Athens with the Greek prime minister, George Papandreou. “On fiscal consolidation it is important to stick to the program objectives.”

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