Another bad day for stocks. Thanks, Europe.
Europe continues to hammer U.S. stocks, as Wall Street fears about the Continent move beyond the possibility of the debt contagion and onto broader concerns about Europe's overall economic stability.
In midday trading, the Dow is down 1 percent.
The broader S&P 500 is down 1 percent.
The tech-heavy Nasdaq is down 1.2 percent.
All three are off their lows of the day, however.
Oil is down to $68 per barrel, its eight-month low.
Here's one of the things driving the Wall Street plunge: Germany's surprise, unilateral, knee-jerk decision to ban naked short-selling, which went into effect immediately. The problem is not the ban. As I wrote here, naked short-selling exists to do one thing, and that's to drive down stocks. It's destructive, unlike plain short-selling, which is a market corrector.
The problem is the way Germany did it: on its own, and out of nowhere and with no cooperation so far from its eurozone allies. It really ticked off the French, which, admittedly, is not that hard to do.
But Wall Street traders don't care about hurt feelings in Paris. What they care about is that it's starting to look like the 16-nation eurozone is falling into a save-yourself anarchy, which not only creates economic uncertainty, it could lead to civil unrest. Europe is the biggest buyer of U.S. exports and the U.S. recovery depends on trade. If Europe cannot be counted on anymore, then you'll see the the U.S. stock market tumble further. And a European collapse could send the U.S. into a double-dip recession.
May 19, 2010; 12:36 PM ET
Categories: Wall Street
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