USA stocks drop as Volkswagen weighs on major automakers

GLOBAL GROWTH WORRIES: Investors took the U.S. Federal Reserve’s decision to postpone an interest rate hike as a sign the global economy is weak.

The Dow Jones industrial average and S&P 500 closed higher, recovering part of their Friday selloff. CURRENCIES: The euro was down 0.9 percent at $1.1205 while the dollar rose 0.5 percent to 120.45 yen.

Markets steadied after the Fed’s decision last week to keep rates at record lows sparked fears about the fragile state of the global economy. The tech-rich composite was hurt by weakness in biotech stocks, apparently triggered by a tweet from presidential candidate Hillary Clinton complaining about exorbitantly high prices for certain ethical drugs.

Talking of home sales, house builder Lennar (NYSE:LEN) has reported profit of US$223mln for its end-August quarter, equivalent to 96 cents a share.

The S&P 500 index is down 15.29 points, or 0.8 per cent.

Today’s sole economic data left little mark on equities even though August existing home sales fell by a much greater-than-expected 4.3% to a seasonally-adjusted annual rate of 5.31 million.

“Yet another Syriza victory in the Greek election… ostensibly secures the continued implementation of the measures agreed in the latest bailout”, Spreadex analyst Connor Campbell said. Tokyo was closed for a public holiday. The index was held back by heavy losses for shares of Volkswagen AG, which fell almost 19% after the U.S. Environmental Protection Agency accused the vehicle maker of deliberately cheating emissions tests. That prompted the biggest drop in two weeks for USA stocks.

ENERGY: Benchmark US crude rose $1.09 to $46.14 per barrel in on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, gained 33 cents to $48.56 in London. The yield on the benchmark 10-year Treasury note rose to 2.21 per cent from 2.13 per cent on Friday.

BONDS: In government bond trading, prices fell.