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Euro debt problems hammer stocks, prompt broad sell-off

Subregions of Europe (The World Factbook)

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UPDATED at 4:23 p.m.:

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.

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By Frank Ahrens  |  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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Comments

The last country to leave the EU please turn off the lights.

The EU has accomplished nothing since its formation except to loose individual countries identity. The Greeks want the Germans to support their lifestyle so they can continue to retire at 53 and live on other peoples money.

Stand back and watch the EU dissolve. Maybe then these countries will decide to deport the millions of illegals living there.

Posted by: txengr | May 4, 2010 11:00 AM | Report abuse

The last country to leave the EU please turn off the lights.

The EU has accomplished nothing since its formation except to loose individual countries identity. The Greeks want the Germans to support their lifestyle so they can continue to retire at 53 and live on other peoples money.

Stand back and watch the EU dissolve. Maybe then these countries will decide to deport the millions of illegals living there.

Posted by: txengr | May 4, 2010 11:01 AM | Report abuse

Anyone else notice that regardless of whether the economy is going full blast or in a deep recession, inflation stays in the 2-3% range? Anyone else find that too good to be true?

It reminds me of the accounting scandal days when the CEO would ask the CFO what the numbers are. The standard CFO response was "What do you want them to be?".
.

Posted by: hz9604 | May 4, 2010 11:04 AM | Report abuse

Of course, the real worry is that the Greek debt crisis will focus investors' attention on the house of cards which is the United States economy. What unbiased observer could possibly look at our skyrocketing national debt and our hopelessly failed political system without seeing an impending disaster? We are due for an interest rate shock of historic proportions...

Posted by: jerkhoff | May 4, 2010 11:04 AM | Report abuse

The market is the market, but these gyrations over Greece are idiotic. No fundamentally new information has surfaced regarding this situation. Please, remain vigilant but calm.

Posted by: CopyKinetics | May 4, 2010 11:10 AM | Report abuse

The last country to leave the EU please turn off the lights.

The EU has accomplished nothing since its formation except to loose individual countries identity. The Greeks want the Germans to support their lifestyle so they can continue to retire at 53 and live on other peoples money.

Stand back and watch the EU dissolve. Maybe then these countries will decide to deport the millions of illegals living there.

Posted by: txengr | May 4, 2010 11:01 AM |
__________________________________________

Perhaps txengr, you've forgotten how drunk with power your good ol' boys in the GOP got during the eight years of "w", and how he single-handedly drove up our budget deficit and debt to astronomical proportions while leaving the incoming Obama Administration with a piss-poor economy that was losing jobs at a pace of 700,000 lost jobs per month.

Maybe you can put that in your 10-gallon hat and smoke it.

In the meantime, don't think for one moment that that Bush Administration spending spree won't come back to haunt us.

You have the nerve to criticize hard-working Greeks overseas, but can the same be said about you and your gas-guzzling trucks and SUV's in the deep south and west Texas? Probably.

And who will be complaining about even higher taxes and lost entitlement sooner rather than later? You.

Posted by: dc1020008 | May 4, 2010 11:31 AM | Report abuse

I love txengr's last sentence about the illegals. Please explain how the illegals have caused the debt problems in Greece. Apparently illegals are the source of all things bad in this world.

Posted by: nperazich | May 4, 2010 11:35 AM | Report abuse

In the absence of positive information I believed my information to be correct. I still do.

Posted by: tossnokia | May 4, 2010 11:45 AM | Report abuse

Someone needs to go tell the Greeks ... "Bailouts" are good -- look at how good US has been in bailing out financial institutions and debt ridden consumers ...

We need bailouts each year and stock markets will be making new highs ... some one call Trichet/Bernanke and ask him to bail out the Greeks and prevent a wide-spread depression in Europe ... haven't they learned anything from the Great Depression ??? For "greater" good ... we must bail out the most irresponsible market participants!

Posted by: free_np | May 4, 2010 12:12 PM | Report abuse

The market is the market, but these gyrations over Greece are idiotic. No fundamentally new information has surfaced regarding this situation. Please, remain vigilant but calm.

---------------------------------------

PIIGS. Portugal, Ireland, Italy (7th largest economy), Greece, Spain. These are the dominoes. And jerkhoff is right: The U.S. is also in trouble.
.

Posted by: hz9604 | May 4, 2010 12:15 PM | Report abuse

The market is the market, but these gyrations over Greece are idiotic. No fundamentally new information has surfaced regarding this situation. Please, remain vigilant but calm.

---------------------------------------

PIIGS. Portugal, Ireland, Italy (7th largest economy), Greece, Spain. These are the dominoes. And jerkhoff is right: The U.S. is also in trouble.
---------------------------------------
Each one of them is "too big to fail" - the US has been in trouble for a long time and ... deficits don't matter ... because we'll pay them with "worth-less" dollars - the Federal Reserve will monetize the debt so people should just accept that every 30 years we'll devalue the currency and move forward ... what's new in that!

Posted by: free_np | May 4, 2010 12:24 PM | Report abuse

The comments to this entry are closed.

 
 
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