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Dow trims early losses, but still down 127
In a move that recalled the global financial crisis four years ago, Spain’s market regulator on Monday said it was temporarily banning short selling of shares on its stock indexes. In a short sale, an investor seeks a profit by betting that the price of a certain stock will fall.
The U.S. briefly banned short selling of dozens of stocks in 2008 as prices were tumbling.
Bank stocks, which tend to take a hit when fear flares in Europe, were among the biggest losers. Citigroup stock dropped 53 cents, or 2 percent, to $25.34.
The price of oil fell $3.69, or 4 percent, to finish the day at $88.14 per barrel in New York. Exxon Mobil stock declined 74 cents, or nearly 1 percent, to $85.21.
The euro slipped just below $1.21 against the dollar, its lowest since June 2010.
There were also signs that a global economic slowdown is hitting U.S. companies that rode out the anemic recovery well by selling more abroad. Now, they can’t grow those sales as fast as before, and what they do sell has fallen in value as foreign currencies have weakened against the dollar. That’s because U.S. companies must translate foreign currency earnings into dollars when reporting to investors, and weaker foreign currencies fetch fewer dollars.
While global sales at McDonald’s restaurants open at least a year rose 3.7 percent, for instance, profits slid by about the same rate due to currency exchange. McDonald’s generates about two-thirds of its revenue outside the U.S.
Stock in the world’s largest hamburger chain slid $2.64, or 2.9 percent, to $88.94 after the company fell short of most Wall Street expectations for both net income and revenue.
Hasbro is also getting hurt by currency trading. If not for the surge in the dollar, its international revenue in the second quarter would have risen 5 percent, instead of falling 4 percent, the toy maker said Monday. Still, the company beat analyst estimates of net income, thanks partly to cost cutting.
Stock in Hasbro, whose products include Monopoly and Scrabble, rose $1.35, or 4 percent, to $35.19.
In other stock news:
• RailAmerica Inc., a short-line railroad operator, rose $2.44, or nearly 10 percent, to $27.25 after announcing it planned to sell itself another short-line operator, Genesee & Wyoming, for $1.39 billion in cash.
• Halliburton, an oil and natural gas services firm, rose 2.4 percent after reporting flat earnings for the second quarter. The company has benefited lately from selling oil drilling around the world.
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