Stocks Solidly Lower, Euro Tumbles
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Wall Street was stuck in the red and the euro fell sharply as traders fretted over Europe's debt crisis.
Today's Markets
As of 3:20 p.m. ET, the Dow Jones Industrial Average fell 102 points, or 0.85%, to 12,051, the S&P 500 slid 15.1 points, or 1.2%, to 1,249 and the Nasdaq Composite dipped 28.9 points, or 1.1%, to 2,650.
Market participants have been fixated on Europe for weeks as single headlines have caused triple-digit spikes and plunges on the Dow repeatedly. Last week, a late-week rally offset a powerful selloff, knocking the broad S&P 500 and Nasdaq indices into the green for the year, joining the blue chips, which were already in positive territory.
In a sign of the continued jitters, the cost to insure euro zone sovereign debt increased on Monday, with insurance on Belgian and French debt hitting record highs. European blue chips sunk 1.6%, while the euro plummeted 1.4% to $1.362. U.S. Treasury yields, meanwhile, pointed modestly lower, while volatility jumped 9.3%. The 10-year note yields 2.036% from 2.057%.
Financial and energy stocks took the brunt of the selling, while industrials and technology shares held up the strongest. Boeing (NYSE:BA) was by far the best-performing Dow component after unveiling an $18 billion deal to sell 50 of its 777-300ER aircraft to Emirates air -- the blue chip's largest sale.
Credit Suisse (NYSE:CS) saw its shares tumbled nearly 5% after Moody's put the Swiss investment bank's credit rating on review for a possible downgrade.
An auction of Italian bonds held early Monday showed investors remained skittish. The $4 billion swath of 5-year notes was sold at a yield of 6.29% -- the highest in 14 years. Still, investors demanded 1.47 times the amount of bonds offered, that compares to a weaker 1.34 times in the previous auction.
The higher the yield the country pays, the more expensive it becomes for it to refinance the billions of euros in debt it needs to refinance this year, and the greater the chances it will need a rescue like Greece, Portugal and Ireland.
Europe Breaths a 'Sigh of Relief'
It remains clear that the situation on the other side of the Atlantic still isn't solved, but there were positive political developments over the weekend, analysts say.
"Europe breathed a sigh of relief over the weekend," analysts at Nomura wrote in a note to clients on Monday.
Italy's lower house of Parliament passed a critical budget-reform bill on Saturday that paved the way for its scandal-ridden premier Silvio Berlusconi to resign. Former European Union Competition Commissioner Mario Monti was tapped to run an emergency unity government that will seek to cut the euro zone's third-biggest economy's $2.6 trillion in public debt, and, perhaps more importantly, restore market credibility in the country.
Traders will still be paying attention to Greece, a much smaller economy, where newly-minted Prime Minister Lucas Papademos was working to forge a government to ensure the country does what is necessary to receive rescue aid it needs to avert a default. However, the leader of the New Democracy conservative party, Antonis Samaras, said Monday his coalition would not support new austerity measures demanded by international lenders.
Energy markets were broadly to the downside as the dollar jumped 0.62% against a basket of six world currencies . The benchmark crude oil contract traded in New York fell 85 cents, or 0.86%, to $98.14 a barrel. Wholesale RBOB gasoline fell 7 cents, or 2.6%, to $2.54 a gallon.
In metals, gold dropped $9.70, or 0.54%, to $1,778 a troy ounce.
Corporate News
Berkshire Hathaway has acquired a 5.5% stake in IBM (NYSE:IBM) for $10.7 billion, the firm's biggest investment in a technology company to date.
Lowe's (NYSE:LOW) posted quarterly results that topped Wall Street's forecast on both the top and bottom line.
Foreign Markets
European blue chips sunk 1.6%, the English FTSE 100 fell 0.47% to 5,519 and the German DAX slid 1.2% to 5,985.
In Asia, the Japanese Nikkei 225 jumped 1.1% to 8,604 and the Chinese Hang Seng soared 1.9% to 19,508.