World Business

Wall Street plunges on concerns over financial sector

(Xinhua)
Updated: 2010-05-01 10:44

NEW YORK: Wall Street plunged on Friday, led by banks, as concerns on financial sector increased.

Financial sector was under pressure, with Goldman Sachs shares tumbling more than 9 percent, on growing concerns over potential criminal charges against Wall Street's most profitable firm.

Goldman is now facing a criminal investigation for its dealings in subprime mortgage securities.

Analysts at Standard & Poor's equities division downgraded Goldman's shares to "sell" from "hold" and trimmed their price target to $140 from $180 after the news.

Separately, Barclays reported a drop in its investment banking revenue, also dragging banking stocks lower.

The Commerce Department said Friday that the US GDP rose at a 3.2 percent annual rate in the first quarter, slightly below the 3.3 percent growth expected by economists.

However, the reading is still encouraging as the growth was boosted by consumer spending, which is critical for a sustainable economic recovery.

A report from Reuters and the University of Michigan showed that consumer sentiment rose to 72.2 in April from a preliminary April reading of 69.5.

The Chicago Purchasing Managers Index rose this month, further evidence of a recovery in the manufacturing sector. The index jumped to 63.8 in April, from 58.8 last month.

On Friday, Chevron Corp, homebuilder D.R. Horton Inc and consumer products maker Newell Rubbermaid Inc all reported better- than-expected profit.

The Dow Jones industrial average was down 158.71, or 1.42 percent, to 11,008.61. The Standard & Poor's 500 index fell 20.10, or 1.67 percent, to 1,186.68 and the Nasdaq was down 50.73, or 2.02 percent, to 2,461.19.