FOX Business: The Power to Prosper
The markets started off the week with a broad selloff as traders watched the debt crisis in Europe deteriorate and wearily prepared themselves for yet another critical European Union summit.
The Dow Jones Industrial Average slumped 138 points, or 1.1%, to 12503, the S&P 500 dipped 21.3 points, or 1.6%, to 1314 and the Nasdaq Composite fell 56.3 points, or 2%, to 2836.
Europe continues to be a major focus among world trading desks. Leaders there have crafted a patchwork of temporary solutions that briefly calm the markets before new and old problems rise back to the surface.
Spain formally requested up to $125 billion in aid to rescue its ailing banks on the day, however, it failed to specify exactly how much it will need. The country's cost to borrow for 10 years is at 6.49% in the secondary market -- too high to sustain for long, but less then the 7.3% where it peaked last week. Meanwhile, the cost to insure $10 million worth of the country's bonds climbed to $575,000 in a sign of the worries that it may become the highest-profile victim of the debt crisis.
A European Union summit, in which policymakers are expected to discuss a possible banking union, is slated for Thursday and Friday. Such events have fallen short of expectations many times in the past, causing frustration among traders who want to look past Europe.
"These days markets always seem to be waiting to see how something will turn out," analysts at Nomura wrote in a note to clients. "As soon as one event gets cleared the market immediately looks to another future event that should finally add 'clarity,' and invariably it doesn’t."
The Euro Stoxx 50, which tracks eurozone blue chips, sold off by 2.6%, while the euro dipped 0.68% to $1.2485.
The markets are also set to get several key reports on the U.S. economy this week. Sales of new, single-family homes jumped 7.6% in May to a 369,000-unit annualized rate, the highest pace since April 2010, according to the Commerce Department. Economists were expecting sales to rise to a 346,000-unit rate from a 343,000-unit rate in April.
Oil prices followed equities to the downside. The benchmark crude oil contract traded in New York fell $1.76, or 1.2%, to $78.36 a barrel. Wholesale New York Harbor gasoline rallied 2.9% to $2.643 a gallon.
In metals, gold rose $18.40, or 1.2%, to $1,585 a troy ounce.
The Euro Stoxx 50 sold off by 2.6%, the English FTSE 100 dipped 1.1% to 5451 and the German DAX dropped 2.1% to 6132.
In Asia, the Japanese Nikkei 225 slumped 0.72% to 8735 and the Chinese Hang Seng slipped 0.51% to 18897.