US stocks slide on Europe economic tremors
Monday, April 23, 2012
NEW YORK (AP) — A collection of worrying news out of Europe sent stocks sharply lower on Monday.
The Dutch government collapsed Monday, a day after French President Nicolas Sarkozy lost the first round of that country’s presidential election. A new report showed that European government debt continues to pile up despite severe budget cuts, which have led to unrest and political upheaval across the continent.
Europe’s major stock markets plunged. In the U.S., the Dow Jones industrial average lost 102.09 points to close at 12,927.17. The Dow had dropped as many as 183 points in morning trading then spent the rest of the day climbing back.
“The main concern today is the stability of the euro zone as a whole,” said Dan Greenhaus, chief global strategist at the brokerage BTIG.
Figures reported by the European Union’s statistics office confirmed the effects of budget-cutting programs on countries that use the euro currency.
Even with widespread spending cuts, overall debt rose to 87.2 percent, the highest level since the euro was created. Separately, a survey of the euro zone’s manufacturing and services sectors unexpectedly fell in April.
In France, Sarkozy came in second behind Francois Hollande, a harsh critic of the spending cuts prescribed as a way to end the region’s debt crisis.
Sarkozy and Germany’s Chancellor Angela Merkel have been the main architects of Europe’s efforts to avoid a collapse of the region’s shared currency.
The Dutch government resigned Monday after it couldn’t reach agreement with an opposition party to bring its budget deficit within European Union rules. The budget dispute raised the prospect that the Netherlands could lose its top AAA credit rating.
The turmoil roiled Europe’s largest markets. Germany’s major stock index, the DAX, lost 3.4 percent, its worst day in six weeks. France’s CAC-40 index dropped 2.8 percent, wiping away all its gains for the year.
The Standard & Poor’s 500 index lost 11.59 points, or 0.8 percent, to 1,366.94.
The Nasdaq composite fell an even 30 points, or 1 percent, to 2,970.45.
Traders shifted money into Treasurys on Monday. The price of the 10-year Treasury note rose, pushing its yield down to 1.94 percent from 1.96 percent late Friday.
David Kelly, chief market strategist at J.P. Morgan Funds, said it looks like investors are looking for a reason to take profits after stocks soared in the first three months of the year. The S&P 500 index rose 12 percent in the first quarter, its best start since 1998. Many investors Kelly talks to see no reason for the market to push higher.
Concerns over Europe pushed the price of West Texas crude oil down 77 cents a barrel to settle at $103.11 per barrel in New York.
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