Wall Street falls on Japan nuclear power crisis

NEW YORK (Reuters) - Stocks tumbled on Tuesday in a global selloff as fears that Japan's nuclear power crisis could turn into a larger catastrophe sent investors in search of safety.

In a second straight day of losses tied to Japan, the S&P 500 fell to within four points of support at 1,257, which was its 2010 closing level. The U.S. benchmark index began trading down more than 2 percent and the Nasdaq composite index briefly turned negative for the year.

"There's a lot more downside before I think we can expect a bottom, probably another 20 percent downside," said Tim Hartzell, who oversees $300 million as chief investment officer for the Houston-based Sequent Asset Management.

"That's when we'll start to look to buy," said Hartzell, whose firm invests in Japanese stocks through exchange-traded funds, including the iShares MSCI Japan Index.

That ETF was down 1.8 percent at $9.86 on Tuesday.

The Dow Jones industrial average was down 193.79 points, or 1.62 percent, at 11,799.37. The Standard & Poor's 500 Index was down 20.56 points, or 1.59 percent, at 1,275.83. The Nasdaq Composite Index was down 44.92 points, or 1.66 percent, at 2,656.05.

A Japanese nuclear power plant sent low levels of radiation toward Tokyo, prompting people to flee the capital. Officials and markets were still trying to assess the full extent of destruction from Japan's earthquake and tsunami, with at least 10,000 people feared dead.

At its session low, the S&P 500 had given back more than half the gains of the latest leg of the stock market rally, from December 1 to the year's high on February 18.

In a sign of investor anxiety, the CBOE VIX volatility index was up 13.7 percent.

Similarly, option traders exchanged about 2.49 million contracts in the SPDR S&P 500 fund by midday as puts outpaced calls by a factor of 2.10:1, according to options analytics firm Trade Alert.

Government bonds and other safe-haven assets, such as the Swiss franc, rose.

At the same time, dollar-denominated Nikkei futures fell 5.9 percent and are now down 14.4 percent for the year.

Some analysts see further downside ahead for securities related to Japan.

The S&P 500 is down about 4 percent since the start of the month after having rallied from early September. It is still up 21 percent since September.

Among U.S. stocks affected by Japan, insurer American International Group Inc slid 2.8 percent at $36.46, while aluminum producer Alcoa Inc lost 2 percent at$15.80.

Shares of General Electric Co, which has combined nuclear ventures with Japan's Hitachi Ltd, dropped 3.4 percent to $19.24.

In light of what could be the worst nuclear crisis since the Chernobyl disaster in 1986, investors questioned the nuclear industry's prospects as shares in the sector slid. The Global X Uranium exchange traded fund fell 13.5 percent to $13.60.

(Reporting by Caroline Valetkevitch; Additional reporting by Doris Frankel, Rodrigo Campos and Ryan Vlastelica; Editing by Kenneth Barry)

WhatsAppFacebookTwitterLinkedinBeloudBluesky