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Stocks fall sharply as Europe worries deepen
Question of the Day
NEW YORK (AP) — Stocks fell sharply Tuesday as worries deepened about Europe’s debt crisis and the weak U.S. economy. The yield on the 10-year Treasury note traded below 2 percent as investors sought safety.
The Dow Jones Industrial Average was down 190 points, or 1.7 percent, to 11,050 in early afternoon trading. It had been down as many as 307 points earlier. Pfizer Inc. was the only one of the 30 stocks in the average that rose.
The S&P 500 lost 19, or 1.6 percent, to 1,155. The Nasdaq composite fell 37, or 1.5 percent, to 2,443.
The losses came after steep declines in European markets. The Stoxx 600 Europe index lost 4.1 percent Monday, while U.S. markets were closed for Labor Day, on concerns that Europe’s debt problems could slow economic growth around the world. The index fell another 0.7 percent Tuesday.
September is historically the worst month for the stock market. Traders expect the trend to hold true this year as uncertainty continues over Europe’s debt crisis and the stagnating U.S. economy. The U.S. government reported Friday that there was no job growth last month. It was the worst reading on jobs since September 2010.
Italy was hit by a general strike Tuesday ahead of votes this week on a budget-cutting package needed to shore up that country’s finances. In the U.S., President Obama is expected to announce plans for encouraging job growth in a televised address to a joint session of Congress on Thursday evening.
“Until there is clarity on where the economy and European governments are headed, the market will continue to question whether the possibility of a recession is fully priced in,” said Quincy Krosby, the market strategist at Prudential Financial.
Bank stocks fell more than the overall market. Federal regulators filed lawsuits late Friday against 17 major banks, saying they sold Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that lost value when the housing market collapsed. Bank of America Corp. lost 5 percent. Wells Fargo & Co. and Goldman Sachs fell 3 percent.
Assets that traders see as safer bets during a weak economy rose. The yield on the 10-year Treasury note fell to 1.97 percent. On Monday the yield fell to 1.91 percent in Asian trading, the lowest since the Federal Reserve Bank of St. Louis began keeping daily records in 1962. Bond yields fall when their prices rise.
In a sign that investors expect the economy to slow, oil futures dropped $2, or 2 percent, to $84.44 a barrel.
A relatively strong report on U.S. service companies did little to stem the losses. The Institute for Supply Management said the service sector grew more than analysts had expected in August. Growth in that part of the economy, which employs nearly 90 percent of America’s workforce, fell the three previous months.
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