U.S. Economy Worries, Greece Strife Drive Dow Down 200 Points

Bikram Pandey
15 Jun, 2011
New York City

World markets traded lower as Greece gained centre stage and U.S. economic worries grew. The rising tensions in peripherals nations and growing evidence of weak economic data knocked the U.S. indexes as low as much as 1.8%. Crude oil falls 4.5% and metals weaken as stocks dive.

[R]4:00 PM New York – World markets traded lower as Greece gained centre stage. The rising tensions in peripherals nations and growing evidence of weak economic data knocked the U.S. indexes as low as much as 1.8%. Crude oil falls 4.5% and metals weaken as stocks dive.[/R]

U.S. and global indexes declined after European finance ministers failed to reach a consensus on resolving the bailout plan for Greece. The macro economic worries trumped investors in the U.S. and in Europe as the prospect Greek contagion become more probable.

The mix of the weak U.S. economic news and the Euro-zone sovereign default worries dragged the Dow, the Nasdaq and the S&P 500 index down by as much as 1.8%. At the low of the day, the Dow lost 200 points and the S&P 500 declined 50 points.

Greek prime minister offered to resign for the national unity to reform government spending and hammer out an agreement with bond holders.

The tense negotiations with the European Central Bank and other finance ministers in the euro-zone failed to produce an accord that was expected to be finalized today as people on the street rioted in Athens.

U.S. consumer prices increased 0.2% in May and mortgage applications surged last week. Manufacturing index declined sharply in New York region this month to the lowest level last seen in November.

Banks and home builders led the decliners after the latest survey of home builders’ showed confidence declined this month to the lowest level last seen in September.

The European indexes slumped after euro area finance ministers failed to reach a consensus on a second bailout package for Greece. Nyrstar agreed to acquire Canada-based Breakwater for C$663 million. Sensata Technologies agreed to buy Sensor-NITE for €225 million.

Euro-zone industrial production rose unexpectedly in April and the OECD unemployment rate declined in April. The factory employment in Germany increased 2.7% annually. French consumer price annual inflation eased to 2% in May.

The UK indexes slid after weak economic data from the U.S. and European leaders struggle to chalk out second bailout for Greece. The UK jobless claims increased more than estimated and consumer confidence surged to its highest level in May.

Stocks in Japan extended gains for the second day in a row after the government passed the bill to provide compensation to nuclear power plant disaster. China linked stocks also gained for the second day on strong economic data. Honda advanced on higher than expected profit estimate.

Australian stocks sold off after hawkish comments from the RBA governor Glenn Stevens. Two-speed economic developments in Australia are expected to widen more as mining investment increase and inflation accelerates in the future. Qantas plans to cut $700 million of spending.

Commodities, Bonds and Currencies

The 10-year bond yield decreased to 2.98% and 30-year bond closed down to 4.22%.

The U.S. dollar increased to $1.417 to a euro and rose against the Japanese yen to 80.98 yen.

Immediate delivery futures of Texas crude oil decreased $4.05 to $95.25 a barrel and futures of natural gas fell 0.001 cents to $4.58 per mbtu and gasoline price fell 8.46 cents to 298.00 cents a gallon.

In metals trading, copper fell 3.40 cents to $4.14 per pound, gold gained $1.10 to $1,525.50 per ounce and silver decreased $0.04 to $35.36.