- Associated Press - Thursday, November 17, 2011

NEW YORK — A spike in borrowing costs for the Spanish government renewed worries about Europe’s debt crisis and pushed stocks lower for the second day in a row.

A stalemate in Congress over cutting the budget deficit also pulled the market down Thursday. Technology stocks sank after NetApp and Applied Materials predicted weaker earnings.

In Spain, an auction of 10-year government bonds left the country paying interest rates of nearly 7 percent. That’s the highest rate since 1997 and a level that economists see as unsustainable. Greece and Ireland received rescue loans from the European Union after their bond yields jumped above the same level.

Concerns about Europe’s debt crisis overshadowed better economic reports in the U.S. The number of people seeking unemployment benefits last week fell to the lowest level in 7 months, a sign layoffs are easing.

“The economic data in the U.S. has been improving,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Conn. “If it weren’t for Europe, I think equity markets would be doing much better right now.”

The Dow Jones industrial average dropped 134.86 points, or 1.1 percent, to close at 11,770.73. The index wavered most of the morning, then turned sharply lower shortly after noon. It fell as many as 229 points at 2:30 p.m.

Spain has much more debt than either Greece or Ireland, which would make it difficult for other countries to rescue. Like Italy, whose main borrowing rate also spiked above 7 percent in the last week, the country is burdened with high debts and slow growth.

The Spanish bond auction came a day after Fitch Ratings warned that major U.S. banks could be “greatly affected” if Europe’s debt crisis continues to spread beyond the financially troubled Greece, Ireland, Portugal, Italy and Spain.

Another looming concern for investors is that a Congressional supercomittee will flounder in its attempt to find $1.2 trillion in budget cuts before a Nov. 23 deadline. Republicans and Democrats traded barbs over whether the other side was negotiating in good faith.

“The worry is they’re literally going to get nothing done,” said Phil Orlando, chief equity market strategist at Federated Investors. “From my perspective as a financial markets professional, I’m absolutely convinced that I could fix this in 10 minutes, but I get the impression we’re watching a slow-motion train wreck.”

The Standard & Poor’s 500 index lost 20.75, or 1.7 percent, to 1,216.16. The index fell below its average over the past 100 days. That’s a bearish signal because many traders wait until indexes fall below such technical levels before deciding to unload their positions.

Technology stocks fell more than the rest of the market. The Nasdaq slid 51.62, or 2 percent, to 2,587.99. All three major indexes are now down more than 3 percent for the week.

NetApp Inc. plunged 12.3 percent, the most in the S&P 500 index, after the data storage company forecast earnings below Wall Street’s estimates. Applied Materials Inc. also said its earnings for the current quarter would be weaker than analysts’ forecasts. The stock fell 7.5 percent.

In corporate news:

• Consumer review site Angie’s List soared 25 percent on the company’s first day of trading. Angie’s List Inc., which runs reviews of veterinarians, plumbers and other local services, priced its initial public offering of 8.8 million shares at $13 late Wednesday.

• The mutual fund company Legg Mason Inc. said the well-known money manager Bill Miller will step down from its flagship mutual fund next year. Legg Mason’s stock dropped 2.8 percent.

• Sears Holdings Corp. fell 4.6 percent after its third-quarter results missed Wall Street’s expectations. The retailer’s sales were dragged down by declining consumer electronics sales and softer sales at its Kmart stores.

• J.M. Smucker Co. lost 1.8 percent after reporting that rising costs for ingredients were cutting into profits.



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