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BUSINESSTuesday 22 September 2015
Stocks end higher, led by financial shares VW rocked by emissions scandal
as DOJ prosecutors come calling
BERNARD CONDON tors in the index rose. The drugs, was among the big
AP Business Writer Nasdaq composite gained losers after Clinton’s com- FRANK JORDANS
NEW YORK (AP) — Stocks 1.73 points, or less than 0.1 ments on drugmakers. The PAN PYLAS
rose broadly on Monday, percent, to 4,828.95. stock dropped $17.51, or Associated Press
recouping some losses from Last week’s broad slump 5.6 percent, to $297.16. BERLIN (AP) — Volkswagen’s chief executive was un-
a sell-off last week, as inves- last week was triggered by Dow members Pfizer, Mer- der withering pressure Monday as an emissions-testing
tors tried to look beyond a decision from the Federal ck and Johnson & Johnson scandal erased more than 13 billion euros (around $15
uncertainty about the out- Reserve not to raise interest also fell. billion) from the company’s market value in a single
look for interest rates. rates. Low borrowing rates Atmel, a California-based trading session.
The major U.S. indexes have helped stocks triple semiconductor company, The stock plunge followed revelations that the Ger-
dipped into losses in the af- in price since 2009, and a was one of the day’s big man carmaker had rigged U.S. emissions tests for
ternoon on sharp declines decision to keep them low winners. The stock surged about 500,000 diesel cars. VW CEO Martin Winterkorn
for drugmakers. The drop normally would encourage after the company ac- apologized, acknowledging that his company had
was sparked by a tweet investors to buy shares. cepted an offer worth “broken the trust of our customers and the public.”
from Democratic presiden- But the central bank cited about $4.6 billion in cash But saying sorry wasn’t enough for investors digest-
tial front-runner Hillary Rod- concerns over a global and stock from Britain’s ing the financial and reputational implications of the
ham Clinton about plans to economic slowdown for Dialog Semiconductor. scandal on the world’s top-selling carmaker.
unveil policy proposals that delaying a hike, and that Atmel provides electron- Volkswagen’s share price plunged a stunning 17.1
would stop “price goug- spooked investors already ics products used in the percent Monday in the first trading since the U.S. En-
ing” in the industry. But ris- on edge after weeks of industrial, automotive, con- vironmental Protection Agency announced the viola-
ing technology and bank- seconding guessing growth sumer, communications, tions, reaching a near three-year low of 133.70 euros,
after tumbling more than 20 percent earlier in the day.
A specialist works at his post on the floor of the New York Stock Exchange. Stocks rose broadly VW has halted U.S. sales of the affected vehicles and
pledged to cooperate with regulators in an investiga-
on Monday, recouping some losses from a sell-off last week, as investors tried to look beyond tion that could potentially lead to $18 billion in fines
against the company. This case also could test the
uncertainty about the outlook for interest rates. (AP Photo/Richard Drew) U.S. Justice Department’s initiative, announced Sept.
9, to hold individual executives accountable for cor-
ing shares helped lift the in China and the impact of and computing markets. Its porate wrongdoing. “We will be working closely with
market by the end of the struggling emerging mar- stock jumped 92 cents, or DOJ throughout this investigation,” EPA spokeswoman
day. kets with plunging curren- 13 percent, to $8.19. Liz Purchia said. Separately, a VW official confirmed
Jack Ablin, chief invest- cies. In Europe, stocks stabilized that the Justice Department has contacted the com-
ment officer at BMO Pri- Financial stocks rose Mon- from losses on Friday. Brit- pany about the case. The official spoke on condition
vate Bank, said investors day after comments from ain’s FTSE 100 index rose 0.1 of anonymity for lack of authorization to discuss the
have been rewarded for Federal Reserve officials percent while the CAC-40 matter publicly. The EPA warned VW that it may refer
buying after sell-offs dur- over the weekend sug- in France climbed 1.1 per- the case to Justice for enforcement, and noted that
ing the current bull market gested some still foresee a cent. Germany’s DAX rose in addition to corporate fines of up to $37,500 per ve-
that has run for more than rate increase as likely this 0.3 percent. hicle, individuals could be fined $3,750 per violation
six years, and so they were year. Federal Reserve Bank The price of oil rose on ex- of the Clean Air Act, which could theoretically add
inclined to buy again. of Atlanta President Dennis pectations that U.S. pro- up to $1.9 billion, given that half a million cars are in-
“Investors who have been Lockhart said on Monday duction would continue to volved. Industry analysts said the VW CEO faces dif-
buying the dips in recent that he was “confident” of slip, helping to eventually ficult questions in the coming days, particularly when
years have benefited,” he a rate rise this year. ease the supply glut. Inves- the company’s board is scheduled to meet Friday.
said, “so perhaps they’ll use Citigroup rose 42 cents, tors are also betting that a “At the moment, I’d be surprised if Winterkorn can ride
that strategy until it doesn’t or 0.8 percent, to $50.71. higher price for wholesale this out, but in Germany there’s often a slightly slower
work anymore.” Stocks of financial compa- gasoline could spur refiners process in these matters,” said Christian Stadler, a pro-
The Dow Jones industrial nies dropped sharply on to process more crude. U.S. fessor of strategic management at Warwick BusinessS-
average closed up 125.61 Friday over fears that lend- crude rose $2 to close at chool. If VW were a U.S. company, the CEO would
points, or 0.8 percent, to ers would have to hold off $46.68 a barrel in New York. have gone more or less immediately, he said.
16,510.19. increasing borrowing rates Brent Crude, a benchmark Volkswagen’s woes were felt across the European
The Standard & Poor’s 500 on their customers since the for international oils used car market Monday. France’s Renault SA watched its
index rose 8.94 points, or Fed had decided to hold by many U.S. refineries, rose share price drop 3.2 percent, and BMW AG ended 1.5
0.5 percent, to 1,966.97. off on hiking rates itself. Bio- $1.45 to close at $48.92 in percent lower. Daimler AG, which owns Mercedes-
Nine of the 10 industry sec- gen, a maker of specialty London.q Benz, dropped 1.4 percent.
The EPA says Volkswagen violated the federal Clean
Air Act by installing “defeat devices” — software pro-
grammed to switch engines to a cleaner mode during
official emissions testing. The software then switches
off again, enabling cars to emit as much as 40 times
the legal limit of pollutants during normal driving.
For a company to engage in such blatant trickery,
top executives must have been informed, said Guido
Reinking, a German auto expert.
Winterkorn is an engineer by training who led research
and development across the VW group beginning in
2007, and became chairman of the management
board the same year.
The illegal software was made and installed in vehicles
with 2.0-liter diesel engines during the model years
2009 through 2015, the EPA said. They include the
Audi A3, VW Jetta, Beetle, Golf and Passat models.q
