Spain causes biggest losses of the year to stock market
The stock market suffered its worst loss of the year Tuesday because of uncertainty about coming corporate earnings reports and concerns that Spain's borrowing costs are creeping close to a crisis level.
The stock market suffered its worst loss of the year Tuesday because of uncertainty about coming corporate earnings reports and concerns that Spain's borrowing costs are creeping close to a crisis level. The decline extended the longest and deepest slump of the year for Wall Street to five days. More than half the first-quarter gain of the Dow Jones Industrial Average has been wiped out, and more than a third for the Standard & Poor's 500, reports Detroit Free Press. The Dow fell 213.66 points, its third triple-digit loss in four days. It closed at 12,715.93, its lowest since Feb. 2.
The dollar and U.S. Treasury prices rose as investors shifted money into lower-risk investments. The yield on the benchmark 10-year Treasury note fell for the fifth straight day and dropped below 2 percent for the first time in a month. After the market closed, Alcoa reported much better quarterly earnings than Wall Street expected, providing hope that the losing streak might end. Alcoa is the first of the 30 stocks in the Dow to report results, according to Muncie Star Press. European markets sold off while Wall Street was still sleeping.
The main stock indexes in Spain and France closed down about 3 percent, the equivalent of a 400-point drop in the Dow. "They've managed to put a Band-Aid on the debt crisis, but there's really no solution," said Colleen Supran, a principal at the investment adviser Bingham, Osborn & Scarborough. "And Spain is a much bigger problem than Greece." The yield on 10-year Spanish bonds rose to almost 6 percent. The point at which governments can no longer afford to raise money on the international bond markets and must seek bailouts is generally considered to be 7 percent, says Cherry Hill Courier Post. Consumer discretionary stocks, which include travel companies, clothing stores and cable companies, fell 2 percent as group, the worst-performing segment of the market. Financial stocks fell almost as much, and even utilities and health care stocks, which are more dependable in times of economic uncertainty, were down more than 1 percent each. The worst-performing stock in the Dow was Bank of America, which tends to take a hit when concerns about Europe grow stronger.
Bank of America was down 3.8 percent, informs BusinessWeek..