Stocks fall sharply; Greek deal held up
NEW YORK — Stocks had their worst day of the year Friday after Greece hit a roadblock on its way to a critical bailout.
The Dow Jones industrial average closed down 89.23 points, or 0.7 percent, at 12,801.23. The broader Standard & Poor’s 500 finished down 9.31 points to 1,342.64. It was the first losing week for the S&P 500 this year.
The Nasdaq composite closed down 23.35 points at 2,903.88.
Just a day earlier, investors had bought stocks after Greek Prime Minister Lucas Papademos and the heads of the three parties backing his government agreed to slash wages, lay off civil service workers and cut government spending.
That was seen as a step toward Greece’s securing a 130 billion euro international bailout that it must have to avoid defaulting on its debt next month and sending a shock through the world financial system.
On Friday, European finance ministers insisted Greece agree to deeper cuts in wages and spending. More than 15,000 people swarmed the streets of Athens, some hurling paving stones at police. Four Cabinet ministers have resigned over the cuts.
“The economy in Greece is deteriorating faster than anticipated, and the austerity measures aren’t particularly popular,” said Mark Luschini, chief investment analyst at Janney Montgomery Scott. “There could be a disorderly default.”
The decline in U.S. stocks was broad, with all 10 industry categories in the S&P 500 down. Materials stocks fell the most, down 1.8 percent. Energy and financial stocks both fell more than 1 percent.
The price of gold fell $16, or nearly 1 percent, to settle at $1,725 an ounce.
Gold usually rises when stocks fall because it’s seen as a safe place to park money when markets are volatile, but that relationship has broken down recently. Many investors now worry that gold is too expensive after a 26 percent surge the past year.
In other news:
LINKEDIN: It rose 18 percent. The online networking company announced that fourth-quarter earnings had soared and revenue doubled.
NYSE EURONEXT: The parent company of the New York Stock Exchange rose 4.5 percent, best among stocks in the S&P 500. It beat Wall Street estimates for revenue and profit. CEO Duncan Niederauer said the company would focus on growth and perhaps small acquisitions after a failed attempt to merge with a German exchange company.
ALCACENT-LUCENT: The telecom gear maker rose 12 percent after announcing it made its first annual profit in 2011 after years of losses.
FIRST SOLAR: The solar panel maker fell 10 percent. The company said a construction delay is threatening to undo the sale of a large solar project to power producer Exelon Corp.
TOTAL: The French oil company expects production to rise this year after higher oil prices helped boost fourth-quarter profit 13 percent.
MICHELIN: The French tire maker reported that profit grew 39 percent in 2011 despite a volume slowdown.