Rising concerns drag down US stocks

NEW YORK (AP) — Spooked traders unraveled a stock market rally late Wednesday as worries mounted about banks and a jump in the price of oil.

The Dow Jones industrial average fell 92.12, or 0.9 percent, to 9,949.36.

The broader Standard & Poor’s 500 index fell 9.66, or 0.9 percent, to 1,081.40, and the Nasdaq composite index fell 12.74, or 0.6 percent, to 2,150.73.

The Dow Jones industrial average fell 92 points, having risen 78 points earlier in the day to a new high for the year.

Analysts say a downbeat note from influential banking analyst Richard Bove raised concerns about Wells Fargo and sent investors rushing to dump financial stocks.

Joe Saluzzi, co-head of equity trading at Themis Trading LLC, said the note was a reminder of troubles still in the economy and was enough to scare many traders.

“They all ran for the exits at the same time,” he said. “They hit the sell button.”

Oil also touched a new high for the year, and Wal-Mart Stores Inc. says it is stepping up its price-cutting, in a sign that consumers are still struggling.

The pullback comes as analysts say some investors have become too relaxed. The Chicago Board Options Exchange’s Volatility Index, known as the market’s fear index, jumped late in the day and ended with a gain of six percent, having earlier touched its lowest level since August 2008. The VIX stands at 22.2 and is down 48 percent this year. Its historical average is 18 to 20. It hit a record 89.5 a year ago at the height of the financial crisis.

Stocks spent much of the day higher after a handful of banks, including Wells Fargo as well as Morgan Stanley and US Bancorp, posted better results for the July-September quarter. All of them also had higher loan losses, however. That is a sign that the broader economy is struggling even as the financial industry recovers.

Last week, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. also reported higher credit losses as consumers and businesses struggle to pay off their bills.