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Wall Street falls on failed Dow Chemical deal

Wall Street falls on failed Dow Chemical deal

U.S. stocks slid on Monday in thin trade, weighed down by surging oil prices rising in response to the Israel-Hamas conflict and Dow Chemical's loss of a major deal with Kuwait.
The blue-chip Dow Jones Industrial Average fell 31.62 points (0.37 percent) to finish at 8,483.93 and the tech-rich Nasdaq dropped 19.92 points (1.30 percent) to 1,510.32.
The Standard & Poor's 500 index declined 3.38 points (0.39 percent) to 869.42.
"The stock market traded with broad-based weakness for virtually the entire session, but was able to pare its losses to close well off its session low in another round of light trading volume," analysts at Briefing.com said.
Investor sentiment was dampened after Kuwait scrapped a US$17.4-billion deal with Dow Chemical to create a petrochemicals joint venture.
Analysts said the pullout, announced Sunday by the Kuwaiti government, could jeopardize the financing of Dow's agreed US$18.8-billion acquisition of Rohm and Haas, a U.S. specialty materials firm.
Kuwait's decision "places Dow's purchase of Rohm and Haas in jeopardy. Dow was going to use US$9.0 billion in proceeds from the deal with the Kuwaitis to finance its acquisition of Rohm and Haas," said Fred Dickson, an analyst at DA Davidson & Co.
Dow shares plunged 16.44 percent to US$15.32 and Rohm and Haas tumbled 16.08 percent to US$53.34.
Shares in Exxon Mobil, the blue-chip Dow's biggest component, rose 1.08 percent to US$78.02, and Chevron gained 1.71 percent at US$71.55.
In the auto sector, General Motors slid 1.64 percent to US$3.60. The biggest U.S. automaker and Chrysler, which is not publicly traded, were due to receive US$4 billion loans each from the U.S . Treasury to avert their imminent collapse. The Treasury is still working on those loans, a Treasury spokeswoman said Monday.
Ford Motor Company skidded 3.06 percent lower to US$2.22 after Dow Jones Newswires reported U.S. billionaire investor Kirk Kerkorian had dumped his remaining stake in the ailing automaker.
Analysts said thin trading was expected this week, clipped by the New Year's holiday Thursday. Scant economic and corporate events were on the calendar for the close of 2008.
"With another holiday-shortened week, we wouldn't be surprised to see a repeat of last week, with volatility continuing to drift lower into the end of the year as equities and the broad market make little movement," said Todd Salamone, analyst at Schaeffer's Investment Research.
The bond market was mixed Monday but hovered near its record highs. The yield on the 10-year U.S. Treasury bond fell to 2.096 percent from 2.137 percent Friday, while that on the 30-year bond edged up to 2.625 percent from 2.613 percent.


Updated : 2020-12-04 14:04 GMT+08:00