Goldman Sachs probe sends Wall Street stocks tumbling
Unconfirmed reports of a criminal probe into Goldman Sachs Group sent stocks on Wall Street tumbling, hurt by selling in the financial sector.
The Wall Street Journal and other media are reporting federal prosecutors are conducting a criminal investigation into whether Goldman Sachs or its employees committed securities fraud in connection with its mortgage trading.
Official sources have neither confirmed nor denied the reports.
The investigation from the Manhattan US Attorney's Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission.
The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group. Goldman and the trader say they have done nothing wrong and are fighting the civil charges.
The Dow Jones Industrial Average ended near its session lows, off 158.71 points, or 1.4%, at 11,008.61.
The 1.8% drop for the week was the worst since January 22 but was up 1.4% for April. It was weighed down by declines of more than 3% each in J.P Morgan Chase, Bank of America, General Electric and Caterpillar.
Goldman Sachs, which isn't a Dow component, slid 9.5%. It is now down more than 14% for the month of April, putting the stock on track for its worst month since the fall of 2008.
The S&P 500 index fell 1.7% to 1186.69, up 1.5% for April. Its financial sector declined 2.5% with every sector hit except utilities.
Consumer stocks affected by a fall in the University of Michigan/Reuters consumer-sentiment index's final reading for April to 72.2 from a final March reading of 73.6.
The Nasdaq Composite Index fell 2% to 2461.19, hurt by weak earnings from several technology bellwethers.
In Canada, the S&P/TSX Composite Index closed at 12,211, up less than 0.1%. For the month, the composite index is facing a rise of nearly 2%.
Other markets: Europe down, Asia up
European shares ended lower on the last trading day of April, with losses from miners, Barclays and BP weighing as investors awaited details of an aid package to Greece.
The Stoxx Europe 600 index lost 0.8% to 259.60, bringing monthly losses to 1.5%.
National Bank of Greece shares gained 2.9%, helping the Greek ASE Composite Index to rise 2.2% to 1869.99.
The German DAX index declined 0.2% to 6135.70, the French CAC-40 index slipped 0.6% to 3816.99 and the UK FTSE 100 index lost 1.2% to 5553.29.
Major Asian markets ended mostly higher as solid earnings reports lifted major Chinese banks in Hong Kong, while real estate companies and exporters paced gains in Japan.
Investors in Japan, returning from the Showa Day holiday on Thursday, pushed the benchmark Nikkei Stock Average of 225 companies up 1.2% to 11,057. For the week, the Nikkei added 1.3%, but closed April with a loss of 0.3%. Year-to-date, stocks remain up 4.8%.
In Hong Kong, the Hang Seng Index rose 1.6% to 21,108.59. Over the week, and for the month, the benchmark index fell 0.6%.
South Korea's Kospi advanced 0.8% to 1741.56, recouping most of the week's losses.
Commodities: Oil, gold up
Crude oil futures ended at a three-week high, bolstered by restored confidence in the global economic recovery and the potential interruption of crude imports to the US Gulf Coast by a major oil spill after an offshore drilling rig exploded.
Light, sweet crude for June delivery settled up 98USc, or 1.2%, at $US86.15 a barrel in New York, just below the year’s high of $US86.84 a barrel on April 6. It gained 2.9% for April, its third consecutive monthly rise.
Brent crude on the ICE futures exchange settled 54USc, or 0.6%, higher at $US87.44 a barrel.
A continued flight to safety amid European debt worries sent gold to its highest level in nearly five months.
June gold, the contract month with the most open positions, rose $US11.90, or 1.02%, to settle at $US1180.70 an ounce in New York. It peaked during the day at $US1182.50, its strongest level since December 4.
Lightly traded but nearby May gold climbed $US11.70, or 1%, to $US1180.10, its highest settlement since December 3. The front-month contract gained 6% in April, its best monthly showing since November.
Currencies: Euro up, yen down
The euro held onto gains, supported by expectations that details of an aid package for Greece will soon be announced.
The euro was at $US1.3328 from $US1.3246 late on Thursday in New York.
The dollar was at ¥94.35 from ¥94.06, while the euro was at ¥125.77 from ¥124.60.
The UK pound was at $US1.5310 from $US1.5324.
The Canadian dollar was steady near parity with the greenback. The Canadian dollar was at $C1.0067 from $C1.0055 late on Thursday.
The Canadian economy grew for the sixth straight month in February, driven by the manufacturing sector and Winter Olympics-related spending.