S&P 500 Index Eases 1.1%, Nasdaq drops 1.6%

Bikram Pandey
23 May, 2011
New York City

U.S. stocks declined on global economic worries. Rating agencies downgrade of Greek and Italian debt only added to the market jitters. The dollar rose as the euro declined. Crude oil fell 2% and silver eased 1%. The Dow, S&P 500 index and the Nasdaq dropped more than 1%.

[R]10:00 AM New York – U.S. stocks declined on global economic worries. Rating agencies downgrade of Greek and Italian debt only added to the market jitters. The dollar rose as the euro declined. Crude oil fell 2% and silver eased 1%. The Dow, S&P 500 index and the Nasdaq dropped more than 1%.[/R]

The U.S. market indexes opened lower after global market concerns weighed on the trading sentiment. The dollar rose and the euro fell after rating agencies lowered views on Italian debts and Greek debts.

All 30 components of the Dow Jones Industrial Average index declined and financials and resources related companies declined. The Dow declined 1% and the S&P index fell 1.1% and the Nasdaq fell 1.6%.

Crude oil declined to $97 a barrel for July delivery. Asian markets declined between 1% and 2% and European markets fell at least 1.5%. Shanghai index declined 2.9%.

European markets opened lower and quickly accelerated losses. By the late afternoon the indexes in Germany, France and UK declined more than 1% and in Spain, Italy and Greece declined more.

The euro fell across all major currencies and traded at $1.4001.

The CAC 40 index fell 1.76% and DAX index declined 1.8%. Index in Milan dropped 3.7% and in Athens declined 1.9% and in Madrid eased 1.2%. Weak crude oil prices also dragged miners lower.

The regional election results in Spain, Greek sovereign debt worries and a slowdown in China’s manufacturing compounded the market jitters.

Italian banks and insurance companies fell sharply after Standard & Poor’s lowered its view on the Italy’s debt rating of A+ to negative on the weakness in the government debt reduction targets. In addition, Fitch Ratings lowered debt rating of Greece.

Both rating actions lag the market perception and are generally ignored by market participants but stock investors sold stocks on the gathering storms in debt markets. Greek debt are expected to restructured and Italy is expected to pay higher interest rates at its three next debt auctions in the year.

Spain’s regional and municipal elections announced early Monday after counting 98% of ballots showed heavy losses for ruling Socialist Party to center-right Popular Party.

Stock Movers

Apple Inc declined 1% after its key manufacturing partner in China Foxconn International Ltd suffered a fatal explosion at one of its plants. Foxconn dropped 4%.

Krispy Kreme Doughnuts Inc soared 17% after it reported better than expected fiscal first quarter results.

Kodiak Oil & Gas Corp declined after the natural oil and gas explorer said it will issue 2.5 million shares to acquire properties in the Williston Basin for $85.5 million.