Europe unrest reverberates on Wall Street
A dip in home sales and unrest in Europe sent stocks sliding Wednesday, extending the longest losing streak for the S&P 500 since mid-July. European stocks had their worst day in months as unrest threatened to boil over in Greece.
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The Nasdaq composite average fell 24.03 points, or 0.8 percent, to 3,093.70.Skip to next paragraph
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The declines came a day after the worst sell-off for the S&P 500 in three months. Charles Plosser, president of the Fed's Philadelphia branch, told an audience Tuesday that the Fed's effort to support the economy would likely fall short of its goals.
Stocks rallied this month on bold moves by central bankers. They had one of their biggest gains of the year Sept. 6 after Mario Draghi, the president of the European Central Bank, said the ECB would buy unlimited amounts of government bonds to lower borrowing costs for Europe's debt-burdened countries.
A week later, Fed Chairman Ben Bernanke said the Fed will buy $40 billion of mortgage bonds each month until the economy strengthens. It also plans to hold interest rates at super-low levels into 2015.
The S&P soared to a nearly five-year closing high of 1,465 the next day, Sept. 14. Since then, as doubts emerge about the effectiveness of the central banks' actions, it has drifted back to where it was before Bernanke's announcement.
In Europe, tens of thousands of protesters took to the streets in Athens and Madrid, where they clashed with riot police ahead of new rounds of spending cuts and tax hikes. The Bank of Spain warned that the country is in a deep recession, a day after protests in Madrid led to at dozens of arrests and injuries.
The developments in Europe blunted any optimism about the U.S. housing market. Wednesday's report, while mixed, appeared to confirm that the market has hit bottom. Other recent data showed that sales of previously occupied homes jumped in August to the highest level since May 2010. Builder confidence is at a six-year high, and construction of single-family homes rose last month to the fastest annual rate in more than two years.
The fear is that a broader recession in Europe could stall whatever economic recovery is occurring in the U.S., where the housing market has been a major drag for five years.
In corporate news, American Greetings Corp. shares jumped $2.48, or 17.3 percent, to $16.82 after the greeting card company said that a group led by its CEO and chief operating officer wants to take it private in a deal that values it at about $581 million.
Automobile auctioneer Copart hit an all-time high and closed up 43 cents, or 1.6 percent, at $27.82 after a strong fourth quarter that topped Wall Street expectations.