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Wall Street drops on Libya turmoil
Published 0:08 AM, 24 Feb 2011 Last update 6:15 AM, 24 Feb 2011

Reuters

NEW YORK - US stocks accelerated their slide, tumbling for a second day as Libya's violence pushed oil prices to $US100 a barrel and tech shares sank, fuelling worry of a market correction.

The Nasdaq led losses. Recent top tech gainers also lost ground, including Netflix, down 5.7 per cent at $US208.87, and Salesforce.com, down 4.2 per cent at $US131.05.

Hewlett-Packard late Tuesday cut its 2011 revenue forecast on slipping demand for its personal computers, and at least six brokerages cut their price targets on the stocks. Shares sank 10.5 per cent to $US43.17.

The day's drop follows a 2.1 per cent decline in the S&P 500 on Wednesday, the index's worst session since August.

The S&P 500 has risen about 25 per cent since the start of September and many analysts have said a short-term correction is likely. Analysts eyed support at 1,296, the mid-January highs on the S&P 500, and also 1,286, the 50-day moving average.

Some saw the drop as a chance to buy, noting that the longer-term outlook remains bullish for stocks.

"This is an opportunity for investors. We're taking advantage of any pullbacks and using them as an opportunity to enter stocks," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis. He favours energy, technology and industrial sectors.

Oil futures in New York jumped to their highest since October 2008 amid worries about supply disruptions in Libya, a top oil producer.

While higher oil prices often boost energy-sector shares, they usually drag on the overall stock market. Higher energy costs tend to ripple through the economy, pushing up the costs of utilities, manufactured goods and transportation.

An energy-sector index rose 2.1 per cent.

A senior aide to Libyan leader Muammar Gaddafi's influential son Saif resigned as an Italian official said he believes estimates that as many as 1,000 people might have been killed in the government crackdown.

"This is a different situation from Egypt when markets bounced right back up the next day. We will have to watch for a couple more days, but this could be the beginning of a correction as low as five per cent," said Scott Redler, chief strategic officer at T3live.com.

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