Europe’s turmoil pulls stocks down
Political uncertainty in debt-hobbled Europe spread to financial markets Tuesday and pushed stocks lower in Europe and the United States.
The Dow Jones industrial average was down almost 200 points at its low point for the day before recovering most of its loss to finish down 76. It was the average’s fifth straight decline.
The Standard & Poor’s 500 index fell 5.86, or 0.4 percent, to 1,363.72. The Nasdaq composite index fell 11.49, or 0.4 percent, to 2,946.27.
European indexes closed near their lowest levels in months, and the euro neared a five-month low against the dollar.
Prices plummeted for commodities like oil and copper that depend on the health of the world economy. The turmoil in Europe added to concerns about slower economic growth in China and weaker job creation in the U.S.
Trading throughout the markets is growing more volatile as Europe’s debt crisis “accelerates to a point where it’s not really controllable with the sorts of Band-Aids they’ve used,” said Daniel Alpert, managing partner at the investment bank Westwood Capital Partners LLC.
In Greece on Tuesday, the left-wing politician struggling to form a new government declared that the country was no longer bound by its promises to cut spending sharply in exchange for international bailout loans.
The politician, Alexis Tsipras, also demanded a moratorium on repaying the part of Greece’s debt that is “onerous.” The main stock index in Greece closed down 3.6 percent after a 7 percent decline the day before.
After a calm finish Monday, benchmark indexes in Germany and France plunged to near their lowest levels this year. Italy’s was near its lowest since last November. The main stock index in Britain hit its lowest point this year.
Central banks have injected billions into Europe’s financial system, providing temporary support for stock and commodity prices, Alpert said. “If that liquidity is supposed to prime the pump, and the pump doesn’t take over, then you’ve got a problem,” he said.
Money flowed into safe investments such as U.S. Treasurys, pushing the yield on the 10-year Treasury note down to 1.85 percent from 1.88 percent late Monday.
In other news:
GASOLINE PRICES: The government lowers its forecast for summer gas prices by 16 cents to an average of $3.79 per gallon following a monthlong drop in oil prices. Drivers had feared paying $4 or even $5 as they hit the road during the peak driving season.
FORD: Rising car and truck sales have prompted Ford Motor Co. to add a week of production at 13 North American factories so the company can make another 40,000 vehicles this year.
WENDY’S: The burger chain fell 4.1 percent after it cut its forecast and said its first-quarter profit missed Wall Street analysts’ expectations.
FOSSIL: The watchmaker plunged 37.6 percent after saying weak sales in Europe caused its first-quarter revenue to fall far short of expectations. The company also lowered its 2012 earnings forecast.
MCDONALD’S: A key revenue figure rose in April as strength in the U.S. and U.K. helped offset weakness in Japan. But results missed analyst expectations and McDonald’s shares drop.
T-MOBILE: It says Nokia Siemens Networks and LM Ericsson AB will supply the network equipment for its new wireless broadband network, a project worth $4 billion.
RIM: BlackBerry maker Research in Motion Ltd. said Tuesday that it has hired two new senior executives, including a marketing chief, as the company looks to regain market share lost to Apple’s iPhone.
HSBC: First-quarter profit fell 38 percent after a larger tax bill and higher insurance claims and liabilities.
MUNICH RE: The reinsurer says first-quarter profit bounced back to $1.02 billion on sharply lower disaster losses.
DEUTSCHE POST DHL: The freight and delivery company says its profit rose 64 percent to $695 million in the first quarter.