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Traders dashed out of risky assets and into the shelter of U.S. Treasury bonds on Tuesday amid concerns political turbulence in Greece will destabilize the eurozone.
As of 3:11 p.m. ET, the Dow Jones Industrial Average fell 114 points, or 0.88%, to 12895, the S&P 500 slid 10.3 points, or 0.75%, to 1359 and the Nasdaq Composite dipped 20.5 points, or 0.69%, to 2937.
The markets came back considerably from the lows of the session in afternoon trading. Indeed, the Dow had been down 198 points at session lows.
The consumer discretionary sector took a big hit on the day following a weak earnings report from Fossil (FOSL), which tumbled some 36%. The financial, energy and basic materials sectors fell sharply as well.
U.S. oil futures were under pressure for the fifth session in a row, having shed more than $9 over the period. On the day, crude was lower by 93 cents, or 0.95%, to $97.01 a barrel. Wholesale New York harbor gasoline rose 0.68% to $2.99 a gallon.
In metals, gold tumbled $34.60, or 2.1%, to $1,605 a troy ounce.
Volatility jumped 3% as tracked by the CBOE's VIX, while the yield on the 10-year U.S. Treasury slumped 0.073-percentage point to 1.845%. The breadth of the selling was wide, with more than seven declining shares trading hands on the New York Stock Exchange for each advancing share.
Greek Worries Flare Up
Elections over the weekend in Greece saw the two mainstream political parties there failing to hold a combined majority in parliament. The PASOK and New Democracy parties had been critical players in drafting agreements with eurozone leadership on implementing deficit-cutting measures in exchange for bailout funds needed to avoid a default.
Reeling from the painful economic consequences of the austerity measures, votes were distributed between PASOK, New Democracy and several other parties, all of which are trying to push for their own policies. All of the groups now have to work together in forming a coalition government, which would require an agreement from no less than three parties, according to The Wall Street Journal.
A situation where no government is formed may prompt fresh elections, while one that backtracks on austerity agreements may put the country's crucially needed bailout at stake. In either case, analysts say the chance of a Greek exit from the eurozone currency bloc can't be ruled out.
"Greece is a big concern," said David Jones, chief market strategist at London-based IG Index, adding that such a situation would "definitely inject a lot of volatility into the market." Still, Jones cautioned that it may be awhile until the picture there becomes clearer.
Eurozone blue chips sold off by 2.1%. The euro fell 0.28% to $1.3015.
On the corporate front, McDonald's (MCD) said its global same-store sales climbed 3.3% in April, a slimmer gain than the 4.29% analysts expected, according to Dow Jones Newswires.
European blue chips fell 2.1%. the English FTSE 100 slipped 1.8% to 5555 and the German DAX dipped 1.9% to 6445.
In Asia, the Japanese Nikkei 225 rose 0.69% to 9182 and the Chinese Hang Seng slumped 0.25% to 20485.