Stocks Tumble on Eurozone Debt Woes
NEW YORK (TheStreet) - Stocks sank more than 1% Monday as heightened concerns about the eurozone's debt crisis curbed investors' appetite for risk.
The Dow Jones Industrial Average shed 131 points, or 1.1%, to close at 12,381, after trading as low as 12,331 earlier in the session. The S&P 500 fell 16 points, or 1.1%, to close at 1317, and the Nasdaq Composite plunged 44 points, or 1.6%, at 2758.
Fears about the eurozone's sovereign debt crisis were fueled by speculation that Greece may have to restructure its debts, the loss of Spain's Socialist party in regional elections, and the decision by Standard & Poor's to lower its outlook on Italy's debt.The news weakened the euro and strengthened the U.S. dollar, sending oil prices below $98 a barrel. Energy, capital goods and basic materials stocks were Monday's weakest sectors, as investors worried that the global industrial cycle was poised for a slowdown. "There is a bigger story at play here. The problems in Europe have been playing out for over a year now," said James Dailey, chief investment officer at Team Financial Managers. "The trigger for this is a burgeoning slowdown in the global industrials zone, which is why commodities are under pressure." Dailey said the prospect of a slowdown in industrials put the spotlight on Germany, which has till now shown significant strength and has helped mask the problems in the eurozone. "Germany will be disproportionately impacted by a slowdown because it is much more levered to industrials than the United States. Germany's banks are significantly at risk because of their leverage." he said. The FTSE in London lost 1.9%, and the DAX in Frankfurt sunk 2%. On the Dow, all 30 components with the exception of McDonalds (MCD) ended the session in the red, with Caterpillar (CAT), Alcoa (AA) and DuPont (DD) the biggest laggards.
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