Economic turmoil in Europe drives Dow down 300
NEW YORK — US stocks plunged on Friday, with the Dow Jones Industrial Average sliding more than 300 points, as global stock markets were stung by fresh anxiety in the eurozone over Greece’s bailout.
The Dow fell 303.68 points (2.69 percent) to close at 10,992.13. The broader S&P 500 fell 31.67 points (2.67 percent) to 1,154.23, while the tech-heavy Nasdaq Composite shed 61.15 points (2.42 percent) to 2,467.99.
Early losses on Wall Street accelerated after the unexpected news that the European Central Bank’s chief economist, Juergen Stark, was resigning “for personal reasons”.
Hours after his resignation was announced, Stark called for drastic reforms to the eurozone, as ECB watchers suggested that the bank was deeply split over its handling of Europe’s sovereign debt crisis.
Stark, a German, had been a sharp critic of the ECB’s controversial program of buying government bonds of deeply indebted eurozone countries like Greece, Ireland, Portugal, Spain and Italy.
“The markets are falling sharply because there is a lot of fear that there might be a European sovereign debt situation, and in particular in Greece,” said Peter Cardillo, chief market economist of Rockwell Global Capital.
Shell-shocked investors scurried for the safety of US Treasuries, sending the yield on the 10-year note to its lowest level in history.
The 10-year yield dropped as low as 1.896 percent, falling below 1.9 percent for the first time ever, before making a partial rebound. Bond prices and yields move in opposite directions.
Financial stocks were down sharply, although US banks fared better than some of their counterparts in Europe: Citigroup sank 4.4 percent and JPMorgan Chase dropped 4.3 percent.
McDonald’s gave the Dow a case of heartburn; shares of the globe-spanning restaurant chain plunged 4.0 percent after it reported that its August sales were worse than expected.
Hewlett-Packard dived 5.1 percent. Investors have dumped shares of the tech firm since it unveiled a controversial restructuring plan last month that includes the spin-off of its personal computer business.
Bond prices closed the day with solid gains even after coming down from record highs.
The yield on the 10-year Treasury note fell to 1.92 percent from 1.99 percent late Thursday, while that on the 30-year bond declined to 3.25 percent from 3.31 percent.
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