Stocks fell on Wednesday in another late-day roller-coaster ride, dragged lower by BP and other energy shares as the U.S. probe of the oil spill in the Gulf of Mexico deepened.
New York-traded shares of BP plc fell 15.8 percent to below $30 on growing worries about the costs the energy giant will have to assume because of the spill.
You hear this unease over solvency and/or a dividend suspension at BP, and I think it's hurting the tone of the market, said Nick Kalivas, senior equity index analyst at MF Global in Chicago.
BP officials have said they have enough cash to handle the crisis, but the cost of protecting BP's debt against default hit record highs, suggesting increased worry about the British oil giant's ability to handle its obligations.
With Wednesday's decline, BP has given up more than half its market value since the explosion that triggered the spill in late April. On April 20, the day of the offshore oil rig explosion, BP's New York-traded shares closed at $60.48. On Wednesday, the shares ended at $29.20.
Wall Street traded higher for most of the session before negative sentiment stemming from the slide in BP shares overtook investor optimism.
Banking shares also fell late, in sympathy with energy shares. MF Global's Kalivas cited concerns that some banks with exposure to the region may be at risk of losses. The KBW bank index <.BKX> lost 0.8 percent, with Birmingham, Alabama-based Regions Financial down 4.4 percent at $6.79.
The Dow Jones industrial average <.DJI> dropped 40.73 points, or 0.41 percent, to 9,899.25. The Standard & Poor's 500 Index <.SPX> fell 6.31 points, or 0.59 percent, to 1,055.69. The Nasdaq Composite Index <.IXIC> lost 11.72 points, or 0.54 percent, to 2,158.85.
Sentiment was positive earlier in the session after sources told Reuters that China's May exports data came in above expectations, reassuring investors concerned that Europe's debt problems could dampen demand for foreign goods and slow the global recovery.
Advancing stocks barely outnumbered declining ones on the NYSE by a ratio of about 16 to 15, while on the Nasdaq, about 7 stocks fell for every 6 that rose.
The S&P found technical resistance at its session high around the 1,078 level, which roughly coincides with its 14-day simple moving average.
The index's moving average convergence divergence, or MACD, a widely followed momentum indicator, fell slightly short of generating a 'buy' signal and also provided resistance.
About 10.53 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's estimated daily average of 9.65 billion.
On the upside, airline shares rose after UBS raised its price target on various top names, including AMR Corp's American Airlines, Delta Air Lines Inc and Continental Airlines Inc .
An index of airline shares <.XAL> rose 0.3 percent after having gained more than 2 percent earlier.
In deal news, Allscripts-Misys Healthcare Solutions Inc agreed to buy Eclipsys Corp in a $1.3 billion deal. Eclipsys shares rose 2.8 percent to $19.02, while Allscripts tumbled 9.7 percent to $16.64.
(Reporting by Rodrigo Campos; Additional reporting by Leah Schnurr; Editing by Jan Paschal)