Stocks drop on eurozone fears
Investors question whether Europe can stem its debt crisis. Greece prepares to form a new government. Spain might bail out a major bank. Alcoa, Caterpillar and GE lead the Dow lower.
Updated at 12:49 p.m. ET
Stocks were dropping Wednesday but paring earlier losses amid deepening skepticism over the eurozone's ability to combat its debt crisis.
The Dow Jones Industrial Average ($INDU) was down by 102 points, or 0.8%, at 12,830. The S&P 500 ($INX) was down by 9.8 points, or 0.7%, at 1,354. The Nasdaq ($COMPX) was falling by 16 points, or 0.5%, to 2,930.
Among the 30 Dow components, 28 were losing value, led by Alcoa (AA), Caterpillar (CAT), and General Electric (GE). Wal-Mart Stores (WMT) and Walt Disney (DIS) were the only stocks gaining on the blue-chip index.
U.S. stocks dropped as political turmoil in Greece renewed concerns about the country's ability to meet the terms of its bailout and remain a member of the eurozone. Analysts at Citigroup (C) said there’s a 75% chance that Greece will exit the eurozone, a thought that is deeply disturbing to the markets.
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If investors have to take big write-downs on Greek debt holdings, they may react by withdrawing investments from the Spanish and Italian bond markets, forcing those countries to ask for bailouts as well. The eurozone’s 500 billion-euro bailout fund would likely be able to handle a rescue of Spain, but it would probably be stretched too thin with additional countries, especially Italy, which has a debt burden of 1.9 trillion euros.
Alexis Tsipras, leader of the Greek radical left Syriza party; New Democracy leader Antonis Samaras; and Pasok party leader Evangelos Venizelos are scheduled to meet in Athens. Tsipras, who wants to cancel the harsh austerity measures imposed on Greece by its international lenders, has until Thursday to form a new government. If a coalition is not formed by May 17, Greece will face another general election.
Eurozone leaders are debating postponing a 5.2 billion-euro payment scheduled for May 10 payment to Greece, according to Dow Jones. European leaders are keeping pressure on Greece to abide by its budget requirements in exchange for more than $300 billion in bailout loans, with the goal of helping the country return to financial markets by 2015.
In Spain, 10-year bond yields were soaring nearly 5.8% amid concerns that it will become the fourth country in Europe to ask for rescue funds, with its banks facing the mounting pain of bad real-estate assets. There have also been reports that Spain may be close to bailing out Bankia, the country's third-largest bank by assets.
London's FTSE was falling 1.3%, and the DAX in Germany was down 0.8%.
In other economic news, the Commerce Department said wholesale inventories rose 0.3% in March compared to February, less than the 0.6% that economists had expected and February's 0.9% increase. Sales of goods at the wholesale level, the products stores buy in anticipation of consumer demand, were up 0.5%.
In corporate news, AOL (AOL) reported first-quarter net income that quadrupled from a year earlier to $21.1 million, or 22 cents a share. Revenue fell 4% from a year earlier to $529.4 million. Analysts were expecting earnings of 7 cents a share on revenue of $526.48 million.
Cisco (CSCO) will report fiscal-third-quarter earnings after the close, and analysts expect a profit of 47 cents a share on revenue of $11.57 billion.
Walt Disney (DIS) posted fiscal-second-quarter revenue Tuesday of $9.63 billion, up 6% from last year and ahead of Wall Street's forecast of $9.56 billion. Earnings excluding items came in at 58 cents a share, 3 cents ahead of analysts' estimates.
Green Mountain Coffee Roasters (GMCR) on Tuesday announced the replacement of its chairman, Robert Stiller, and lead director, William Davis, after the executives were forced to sell roughly 5.5 million Green Mountain shares because of margin calls. The company called the sales "inconsistent" with its internal trading policies.
The benchmark 10-year Treasury was rising 7/32, diluting the yield to 1.82%. The dollar index, which measures the dollar against six currencies, was up 0.3%.
The June crude oil contract was off 55 cents at $96.46 a barrel. June gold futures were slipping $20 to $1,584.50 an ounce.
So, if you've been making your payments on time, you're not eligible for a principle reduction. And once again, if you are responsible and play by the rules and fulfill your obligations, you get the privilege of subsidizing irresponsible losers who don't play by the rules and don't think twice about screwing somebody else. It's no surprise this scheme has the seal of approval from the federal gov.
Totally agree! Which is why I have said all along that a program just like this one should have been made available to ALL, with the TBTF's picking up the tab. It's the all give and no take that is continuing to kill our economy.
The next government (Greece) must decide by next month whether it will pay interest on $250 million of 4.5% notes expiring in 2016. Next week the government must decide if it will pay 436 million euros (or $568 million) due on a floating-rate note issued 10 years ago.Wonder how much Greek paper is owned by the Fed?
A select group of struggling mortgage borrowers is about to get an offer that sounds too good to be true. Executives at Bank of America say that they will begin mailing 200,000 letters offering certain customers mortgage principal reduction.
Bank of America, in a deal with state attorneys general and the U.S. Department of Justice, committed $11 billion to mortgage-principal reduction...
Executives say borrowers receiving the letters are eligible, but they still have to prove they qualify. In order to be eligible, a borrower must be 60 days late on the mortgage payment as of Jan. 31, 2012. The borrower has to owe more on the mortgage than the home is currently worth, commonly known as being "underwater" on the mortgage, and the borrower's loan must either be owned by Bank of America or serviced by Bank of America...So, if you've been making your payments on time, you're not eligible for a principle reduction. And once again, if you are responsible and play by the rules and fulfill your obligations, you get the privilege of subsidizing irresponsible losers who don't play by the rules and don't think twice about screwing somebody else. It's no surprise this scheme has the seal of approval from the federal gov.
And no matter how much you want to try and politicize this issue, it really all comes down to simple math. Without the loans that the banks admittedly knew were going to go bad and fall on the taxpayers to cover, we never would have got here.
There hasn't been a recovery. The upward trend in commodities until recently has only been a function of Ben Bernanke's printing operations, not a recovery. Due to an understated deflator number it may have looked like a recovery, but the truth is the the deflator used to correct the numbers for inflation is about half of what it should be.
We are now overdue for our four to six year cyclic downturn. Europe and Asia are already there. The Euro-Zone crisis (and it is a crisis) is making things even worse. This coupled with the massive mal-investments over the past dozen or so years means that this is going to be ugly for anyone long just about anywhere for a while to come.
dollar looking better why is gas so high? just more lies from the obama administration.
QUESTION: HOW MANY OF THE EUROPEAN COUNTRIES WOULD COME TO OUR RESCUE IF WE NEEDED A HELPING HAND?
YOU GUESSED IT "0"
ON THAT NOTE HOW MANY NATIONS IN THE WORLD WOULD COME TO OUR RESCUE?
RIGHT AGAIN "0"
We are now overdue for our four to six year cyclic downturn. Europe and Asia are already there. The Euro-Zone crisis (and it is a crisis) is making things even worse.
This is where "spend and pretend" has gotten us.
You're absolutely right. I have no doubt that if unfettered the U.S. could re-establish the preeminence it once had on the world stage.
The thing is that Americans are now not unfettered, are rewarded for indolence, and punished for achievement and saving.
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[BRIEFING.COM] The S&P 500 settled lower by 0.8% after early strength turned into afternoon weakness.
Today's headline event came in the form of Ben Bernanke's testimony before the Joint Economic Committee. During his remarks, Chairman Bernanke said premature tightening of monetary policy could stall the pace of recovery. This followed weeks of conflicting remarks from FOMC members, which sparked speculation regarding possible changes to the Fed's policy course.
However, ... More
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