Stocks Crushed by Europe Debt Concerns
NEW YORK (TheStreet) -- Stocks were beaten down Wednesday with all three major U.S. equity indices finishing near session lows as worries about Europe's deteriorating debt situation continued to sap investor appetite for risk.
Borrowing costs rose in Spain and Italy as eurozone leaders struggled to settle on a course of action, while a new survey found popular opinion in Greece favors a softening of the austerity measures that the country's current bailout plan is contingent upon. The European Union floated a proposal for a unified banking system for the eurozone earlier in the day, but that did little to stabilize the situation as the euro was pushed back down near a two-year low vs. the dollar.
A worse-than-expected read on a U.S. pending home sales index also contributed to the selloff, which was accompanied by heightened volatility in other asset classes. Oil dropped below $90 a barrel, and demand for bonds soared sending the yield on the 10-year Treasury to new record lows. Despite a bout of weakness earlier in the session, gold settled sharply higher.
The Dow Jones Industrial Average finished down 161 points, or 1.3%, at 12,420. The session low was 12,396.The S&P 500 lost 19 points, or 1.4%, at 1313. The Nasdaq fell 34 points, or 1.2%, at 2837. With only one trading day left, May is set up for a particularly ugly finish. The Dow is down 6% for the month with only five positive finishs. The Nasdaq has lost 6.9% and the S&P 500 has surrendered 6.1%. Year-to-date, the indices are still up 1.7%, 8.9%, and 4.4% respectively. Twenty-nine of 30 components closed in the red, led by Alcoa (AA), Bank of America (BAC), Caterpillar (CAT), Chevron (CVX) and Exxon Mobil (XOM). Intel (INTC) was the only blue-chip stock to close higher, adding 0.2%. In the broad market, the energy, consumer cyclicals and capital goods sectors were being hit hardest. On the New York Stock Exchange, losers outpaced winners by a more than 6-to-1 ratio, while the ratio on the Nasdaq was close to 4-to-1. July oil futures settled down $3.16 at $87.60, while August gold futures were up $15.40 to settle at $1,566.40 an ounce.
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