Stock Rally in U.S. Wiped Out on Insider-Probe Report, Tax Deal Concerns
U.S. stocks erased gains in the final hour of trading, pulling the Standard & Poor’s 500 Index down from a two-year high, after a probe of insider trading reportedly widened and President Barack Obama said he’ll push to overhaul the tax code in two years.
3M Co., Hewlett-Packard Co. and JPMorgan Chase & Co. lost at least 1.5 percent for the biggest declines in the Dow Jones Industrial Average as the 30-stock gauge erased an 89-point rally.
The S&P 500 rose 0.1 percent to 1,223.78 at 4 p.m. in New York after surging 1 percent earlier. The Dow lost 3.03 points, or less than 0.1 percent, to 11,359.16.
“It all happened at the same time, taking the market off its highs,” said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages about $2.5 billion in San Antonio. “Investors got a little spooked during Obama’s press conference,” he said. “Then, we had news that the SEC may widen the insider trading probe. That took some wind out of stocks.”
Earlier gains came after Obama agreed to extend tax cuts and the Treasury sold its remaining stake in Citigroup Inc. The market retreated in the final hour after Reuters reported that federal authorities have issued more than a dozen subpoeanas to hedge funds and investment firms as part of an investigation of insider trading. The news service cited people familiar with the inquiry.
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