View full sizeStocks plunged Wednesday morning on growing fears of instability in Europe.
Fear about Europe’s
financial stability caused traders to retreat from most investments seen
as risky Wednesday, punishing U.S. stocks and pushing the yield on the
benchmark 10-year Treasury note to a record low.
Major U.S. stock
indexes fell more than a percentage point in the first half-hour of
trading. Traders dumped European stocks and government bonds and the
euro fell to a nearly two-year low against the dollar. Borrowing rates
for European governments rose sharply, even for relatively stable
nations such as France.
Rising demand for low-risk, easily
tradable securities pushed the yield on the 10-year Treasury note to
1.64 percent, the lowest on record, from 1.74 percent late Tuesday.
German government bond yields also plunged.
The Dow Jones
industrial average plunged 131 points to 12,449. The Dow has had a
miserable May. It’s down 5.9 percent for the month, putting it on track
for its first losing month since September.
Concerns about Europe
seemed to lurk around every corner: Europe’s executive body said
consumer confidence fell sharply last month. Spaniards withdrew money
from their banks, spreading fear about that nation’s ability to go on
without bailouts. Spain’s main stock index fell two percent.
If
Europe’s financial crisis plunges it into a deep recession, global
economic growth will likely falter, reducing demand for commodities and
machines that power growth. Fearing that outcome, traders pushed heavy
equipment maker Caterpillar and aluminum company Alcoa to the biggest
declines among the 30 companies that make up the Dow.
In other U.S. trading, the Standard Poor’s 500 index lost 15 to 1,317. The Nasdaq composite average slid 35 to 2,835.
Metals,
food and energy commodities all fell sharply. Crude oil lost more than
$2 to $88 a barrel, a large move. Crude has been falling steadily since
the beginning of May, when it traded as high as $106 a barrel.
The euro fell as low as $1.2405, the lowest since the summer of 2010.
Spain’s
borrowing costs soared to the highest level since the country joined
the euro. Traders are worried that the country won’t be able to navigate
a real estate crash that has hobbled one of its biggest lenders,
Bankia.
The yield on Spain’s 10-year bonds, a key indicator of
market confidence in a country’s ability to pay down its debt, shot as
high as 6.67 percent, matching the level it hit at the height of the
euro crisis late last year.
Agricultural company Monsanto was one
of the few big gainers in a sea of red. The stock jumped 3 percent after
the company’s CEO told investors that earnings will likely surge 25
percent this year, far more than Wall Street had been expecting. Sales
were strong in its seed and chemicals business, including Roundup
herbicides.
Blackberry maker Research in Motion plunged 10 percent
to $10 after the company said late Tuesday it had hired a team of
bankers to help it weigh its options — Wall Street jargon for a possible
sale or reorganization. RIM’s business has been crumbling as smartphone
users move to iPhone and Android devices.
– The Associated Press
Similar news:
RSS
Facebook
Google+
Twitter
