US stocks fall on European economic, debt worries
Tuesday, August 16, 2011
NEW YORK (AP) — Worries about Europe’s economic and debt problems Tuesday sent stocks to their first loss in four days.
The major indexes bounced up and down in another volatile day. The Dow Jones industrial average fell more than 120 points in the first half hour of trading after a report showed that Germany’s economy stalled last quarter and dragged down growth for Europe.
The Dow pared most of its losses by noon, but resumed its drop after the leaders of France and Germany tried to calm worries about Europe’s debt problems by pushing for long-term political solutions. Investors were hoping for immediate financial measures like the introduction of a single bond jointly backed by the eurozone’s members. The Dow fell as many as 190 points in the early afternoon before again recovering.
At the close, the Dow was down 76.97, or 0.7 percent, to 11,405.93. It was the first time in seven trading days that the Dow rose or fell by less than 100 points. The Standard & Poor’s 500 index fell 11.73, or 1 percent, to 1,192.76. The Nasdaq composite fell 31.75, or 1.2 percent, to 2,523.45.
A proposal for a Europe-wide tax on financial transactions also hurt stocks, said Nick Kalivas, vice president at broker MF Global. “It’s another slap in the face to the banking system” and would cut into profits and limit trading, he said. “The path toward economic growth still looks pretty uncertain.”
“Investors don’t know which way to go here,” said Paul Brigandi, senior vice president of Direxion Funds, which has about $7 billion in assets under management.
On one side, he said buying looks attractive because stocks are cheaper after the S&P 500’s 10.4 percent drop from July 21 to Monday. And more U.S. companies on Tuesday joined the stream of those that have reported earnings above analysts’ expectations. But on the other side, selling looks appealing because of worries about the global economy and debt problems in both the United States and Europe.