August 15, 2022

European Worries Send U.S. Stocks Lower

Stocks were lower Friday on Wall Street after questions about some big Italian banks raised new concerns about the European debt crisis, outweighing a better-than-expected report on American durable goods orders.

The Italian banks UniCredit SpAand Intesa Sanpaolo fell sharply on concerns about their capital positions alongside uncertainty about the euro-zone crisis. Trading in the banks’ shares was briefly suspended.

Greece’s government faced an electorate vehemently opposed to austerity measures that must be passed in parliament next week to avert default, but progress is being made in persuading banks to take part in a second bailout.

“Essentially they all know they have to help Greece, and that is the biggest thing,” said Keith Springer, president of Springer Financial Advisors in Sacramento. “But Greece isn’t helping themselves and that is all anybody wants. All they are looking for is for Greece to help themselves a little bit.”

In afternoon trading, the Dow Jones industrial average was down 100.17 points, or 0.8 percent, at 11,949.83. The Standard Poor’s 500-stock index was down 13.21 points, or 1 percent, at 1,270.29. The Nasdaq composite was down 30.41 points, or 1.1 percent, at 2,656.34.

New orders for long-lasting manufactured goods in the United States increased 1.9 percent in May after dropping 2.7 percent in April, the Commerce Department reported, as bookings for transportation equipment rebounded strongly.

“This is giving us a bit of a relief bounce off the lows, but is it enough to turn us? That depends on how the headlines develop throughout the day,” said Roger Volz, director of cash equities at BGC Financial in New York.

Markets in Germany, France and Britain had been up for most of the session but turned down late in the day. The DAX index in Germany closed down 0.4 percent, while the CAC 40 in France was down 0.1 percent and the FTSE 100 in Britain showed a gain of 0.4 percent. A major Italian stock index, FTSE Italia, was off 1.5 percent.

Earlier, Japan’s Nikkei 225 benchmark gained 0.9 percent to close at a three-week high.

Stocks on Wall Street closed way off session lows on Thursday but lingering economic uncertainty ultimately drove the S. P. lower, pushing the index within less than a half point of its 200-day moving average at one point — a line the bulls have been able to hold since last September.

“It is difficult to become overly bullish or overly bearish at current S. P. 500 levels,” Ari Wald, equity strategist at Brown Brothers Harriman, wrote in a research note.

“On one hand, market breadth has not picked up enough on the downside to suggest significant internal deterioration. On the other, weak upside attempts despite 200-day moving average support and an oversold inflection by near-term momentum gauges suggests the correction is still intact.”

Late on Thursday, European Union leaders promised more money to help Greece stave off looming bankruptcy, on condition that the Parliament in Athens next Tuesday enacts an austerity plan finalized in fraught last-minute talks with international lenders.

Though still fragile, the agreement was enough to lure investors back into some riskier assets which they had dumped in the run up to the pact.

“The agreement has been received well by the markets,” said Ian Richards, European equity strategist at RBS.

“We have got to get through the votes on June 28. It looks like it will go through, but it’s not a formality. So the market is going to be cognizant of that near-term risk.”

Foreign exchange traders were less positive about the Greek deal, focusing on the struggles ahead for the euro.

“The euro is struggling a bit and this deal isn’t really a game changer,” said Jeremy Stretch, head of currency strategy at CIBC World Markets. “It just brings into focus the hurdles the Greeks have to cross with these austerity measures.”

The currency was lower against the dollar at $1.4166.

Article source: http://www.nytimes.com/2011/06/25/business/25markets.html?partner=rss&emc=rss

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