Euro debt problems hammer stocks, prompt broad sell-off
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Stocks were never able to recover from fears of a widening sovereign European debt crisis today, as all three major indexes closed down more than 2 percent in a broad sell-off.
The Dow closed down 2 percent, crashing through the 11,000 barrier to settle at 10 926.77.
The broader S&P 500 closed down 2.4 percent at 1,173.60.
The tech-heavy Nasdaq was the day's biggest loser, closing down 3 percent at 2,424.25.
Pfizer, Merck and Wal-Mart are the only three of the Dow's 30 components to trade higher today.
The dollar rose strongly today, with the dollar index closing up 1 percent. And the so-called "fear index," or the Volatility Index (VIX) made its biggest one-day jump since October 2008. The VIX reflects how traders think about the market going forward.
Stock plunge continues near mid-day
11:18 a.m.: Growing European sovereign debt problems have overwhelmed positive U.S. economic news released this morning, sending shock waves through Wall Street and prompting a massive stock sell-off.
Nearly two hours into the trading day, the Dow has crashed down through the 11,000 level to 10,907, down 2.2 percent.
The broader S&P 500 is down 2.4 percent and the tech-heavy Nasdaq is down a whopping 3.1 percent. The Nasdaq has led both gains and losses during the past several months.
It seems like only yesterday -- it nearly was -- that I was writing that stocks closed April with their third straight winning month a row. Since then, however, stocks have see-sawed, driven up and down by Europe's lurching Greece debt rescue issue. Now that Greek's bailout is in place, however, there are bigger concerns on the horizon: chiefly, Spain, which I'll write about later today and which most agree is "too big to bail."
Euro debt problems prompt big opening sell-off
10:15 a.m.: Stocks opened in a broad sell-off, as traders and investors again showed worries over European debt problems. In the coming hours, we'll see whether some positive U.S. economic data just released will bring the markets back.
In the first 30 minutes of trading, the Dow is down 1.4 percent.
The broader S&P 500 is down 1.5 percent and the tech-heavy Nasdaq is down 2.2 percent.
Europe's debt problems have caused American stocks to whipsaw in recent days, rising one day, then falling the next. The markets were happy that a Greek rescue plan had been approved, but the details of the austerity plan do not necessarily paint a rosy picture for the tiny profligate nation.
Of course, there are real worries that the Greek contagion will spread across the rest of southern Europe, with Spain and Portugal already having their debt rating downgraded.
Accordingly, the euro is dropping and the super-currency has hit a one-year low against the dollar.
Moments ago, new economic data on factory orders and pending home sales were released.
March factory orders increased 1.3 percent, the same amount of the revised February increase, indicating that manufacturing is maintaining its slow-but-steady recovery. If manufacturing continues to increase, employers will begin hiring back laid-off workers, and the nation's unemployment rate of 9.7 percent should begin to fall.
March pending home sales rose 5.3 percent compared with February, and were up 21 percent compared with March 2009. Home sales have benefited from the tax credit that expired at the end of April, and real estate economists hope that home sales will become self-sustaining -- that is, will continue to increase without the aid of government subsidy -- by the end of this year, IF unemployment comes down.
Follow me on Twitter at @theticker.
May 4, 2010; 4:23 PM ET
Categories: The Ticker | Tags: Business, Portugal, Real estate, Southern Europe, Spain, Spain and Portugal, Twitter, United States, european debt, european debt crisis, greece debt, greek debt, manufacturing orders, pending home sales, stock market
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