Stocks lower as Europe teeters
US stocks skidded today as a looming election in Greece and the broader debt maelstrom in Europe provided an ominous backdrop.
Major market indexes wavered for much of the day but fell sharply after the finance minister of Cyprus warned that his country may seek its own bailout this week, stoking the uneasy feeling that the crisis is far from over.
In a troubling sign, Spain’s 10-year borrowing rate inched up to 6.71% from 6.67%. Other countries in Europe have had to seek bailouts when their borrowing rates hit 7%.
European leaders said over the weekend that they will lend up to £80 billion to Spain’s banks, but that has not soothed markets. Investors want more details about the plan, including where the money would come from and how likely it is that Spain would pay it back.
The Dow Jones industrial average shed 77.42 points to end at 12,496.38 after another day of volatile trading. The Dow had been down as much as 120 points and up as much as 24 points. That followed a triple-digit gain on Tuesday and a triple-digit loss on Monday.
The Standard & Poor’s 500 index fell 9.30 points to 1,314.88, and the Nasdaq composite index fell 24.46 points to 2,818.61.
Richard Ross, global technical strategist at Auerbach Grayson in New York, said he’s still bullish on US stocks. He thinks their decline throughout May, perhaps a necessary correction, means they’re ready to charge ahead.
The market’s inability to make up its mind this week, he said, is a result of investors trading on news headlines rather than examining the fundamentals of individual stocks.
“The sovereign debt crisis, the Greek elections, the Egyptian elections – if you are basing an investment strategy around these headlines, you will be paralysed,” Ross said.
The interest rate on the US 10-year Treasury note fell to 1.60 from 1.66%. Investors moved money into one of the few places where they think it will be safe, with the US government.
Big movers included JPMorgan Chase, which rose 53 cents to 34.30 dollars after CEO Jamie Dimon testified to Congress about the bank’s surprise two billion dollar trading loss. Dell jumped 30 cents to 12.28 dollars after the computer maker said it would begin paying its first shareholder dividend. Cigarette maker Philip Morris International rose 69 cents to 85.70 dollars after announcing it would buy back more of its own stock.
