Weary investors sell stocks as Spain seeks help

Spain formally asked for help to rescue its ailing banks, but its request left many questions unanswered, including just how big a bailout it needs. Unsettled markets contributed to the Dow dropping 138 points to close at 12,502.

|
Richard Drew/AP
Specialist Peter Kennedy, left, and trader Christopher Crotty work on the floor of the New York Stock Exchange Monday, June 25, 2012. Europe's latest efforts to quell its financial crisis left investors exasperated, causing steep losses in stock markets on both sides of the Atlantic.

Europe's latest efforts to quell its financial crisis left investors exasperated Monday, causing steep losses in stock markets on both sides of the Atlantic.

In Europe, Spain formally asked for help to rescue the country's ailing banks, but its request left many questions unanswered, including how much it needs of the $125 billion loan package offered by other European governments. The uncertainty unsettled markets, pushing borrowing costs higher for Spain's government. Spain's stock market plunged 3.7 percent.

"Right now it's all about Europe, and confidence is pretty low," said Doug Cote, chief market strategist for ING Investment Management. "The policies that they proposing are too little too late."

The Dow Jones industrial average dropped 138 points to close at 12,502.66, a loss of 1.1 percent. The broader Standard & Poor's 500 index fell even more, 1.6 percent.

Big bank stocks slumped. Many analysts expect banks in Europe and the U.S. to suffer from a freeze-up in Europe's financial system if Spain fails to rescue its troubled banks. Spain's banks have been hobbled by loans made during a real-estate bubble, and the government has been inconsistent about how much help it will need to save them.

Bank of America dropped 4 percent, the biggest fall among the 30 stocks in the Dow Jones industrial average. BofA's stock lost 34 cents to $7.60. JPMorgan Chase fell 67 cents to $35.32 and Citigroup dropped $1.24 to $26.75.

Analysts worry that Europe's piecemeal approach to its spreading government debt crises may fall short, and the banking system of a large country like Spain could collapse. That could shock tightly connected global financial markets.

"It's the same headline risk that we've been dealing with for God knows how long," said Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management in Pennsylvania. "Everybody wants something to happen sooner or later, and nothing's happening."

The leaders of the 27 countries in the European Union meet Thursday and Friday in Brussels for another summit aimed at reining in the crisis, but market players remain skeptical that Germany will sign off on efforts to quell the crisis. As the region's largest and strongest economy, Germany has to participate for any plan to work.

"What the market wants is action," Cote said. He said investors wanted to see steps toward binding the weak and stronger economies closer together.

The dollar and Treasury prices rose as investors shifted money into low-risk investments. The yield on the 10-year Treasury note fell to 1.61 percent from 1.67 percent late Friday.

In other trading, the S&P 500 index fell 21.30 points to 1,313.72. All 10 of the index's industry groups fell. The Nasdaq composite lost 56.26 points, or 1.9 percent, to 2,836.16.

Energy stocks were also big losers after the price of crude oil fell again. Benchmark U.S. crude lost 55 cents a barrel to $79.21, continuing a slump that has brought the price down from $110 in late February. Exxon Mobil fell 87 cents to $81.24.

Energy prices have been falling as traders anticipate that slower growth in China and the crisis in Europe will drag down global economic growth and decrease demand for energy.

European markets closed sharply lower. Stocks dropped 4 percent in Italy and 2 percent in both France and Germany. Shares of European banks, including Spain's Banco Santander SA and Deutsche Bank AG, sank.

Borrowing costs rose for Spain and Italy, a sign of skepticism that those countries will be able to pay their debts. The yield on Spain's 10-year government bond rose 0.16 percentage point to 6.58 percent. That's dangerously high.

Among other stocks making big moves Monday:

Teva Pharmaceutical Industries gained 4 percent after the drugmaker said a federal court reaffirmed patents protecting its multiple sclerosis treatment Copaxone. The stock jumped $1.71 to $39.72.

Chesapeake Energy dropped 8 percent. Reuters reported that the company colluded with a Canadian rival to suppress land prices in areas that were considered rich in oil and natural gas. The stock lost $1.58 to $17.03.

Pfizer and Bristol-Myers Squibb both sank after federal regulators delayed approving their highly touted blood-thinning drug, Eliquis. Bristol-Myers's stock dropped 3 percent, or $1.23, to $34.13. Pfizer's fell 1 percent, or 26 cents, to $22.47.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Weary investors sell stocks as Spain seeks help
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2012/0625/Weary-investors-sell-stocks-as-Spain-seeks-help
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe