Wall Street Down 2% on Euro Jitters

Bikram Pandey
08 Dec, 2011
New York City

Market indexes in New York closed lower as European leaders gather to find a solution to the growing debt contagion. Market mood soured after the European Central bank did not expand its sovereign bond purchase program. Banks in Europe also need to raise more capital. Initial jobless claims declined

[R]4:15 PM New York – Market indexes in New York closed lower as European leaders gather to find a solution to the growing debt contagion. Market mood soured after the European Central bank did not expand its sovereign bond purchase program. Banks in Europe also need to raise more capital. Initial jobless claims declined to the lowest level in nine months.[/R]

U.S. stocks traded in a tight range with a negative bias as leaders of the European Union meet in Brussels. Market indexes accelerated the decline in the early afternoon after the ECB President Mario Draghi denied that the bank is willing to expand its sovereign bond purchase program.

Earlier in the day, before the market opening in New York, European Central Bank cut its lending rate by 25 basis points to 1% and expanded loan offerings to banks and opened its first dollar funding program that attracted bids of $50.5 billion.

The nervousness of the European markets overshadowed an improvement in the initial weekly jobless claims in the U.S. In the last week, the jobless claims declined below 400,000.

Market indexes in New York opened lower and declined between 1.7% and 2.2% at close. European markets traded lower and smaller markets fell sharply. Market indexes in the region fell between 1.5% and 3%.

In corporate news, DemanTec Inc soared after the Internet tools maker agreed to be acquired by IBM for $440 million. MEMC Electronic Materials Inc said it plans to shutter some of its manufacturing facilities and lay off 20% of its staff. Pacific Sunwear agreed to $160 million financing and indicated that its latest restructuring move will improve operating profitability.

McDonald’s said global same stores sales rose 7.4% after strong sales in Japan and China.

The Nikkei index in Japan declined ahead of the European summit. Softbank led the net new subscriber additions for the mobile communications services for the 20th month in a row and Freight shipping companies struggled near the 10-year lows.

Australian stocks edged lower in a broad market weakness and the unemployment rate increased to 5.3% in November as employers cut more than expected full-time positions and added fewer than expected part-time jobs. IAG, the insurer closed higher on takeover speculation.

Commodities, Bonds and Currencies

The bonds yield on 10-year U.S. bond closed down to 1.97% and 30-year bond decreased at 2.99%.

The U.S. dollar gained 0.5% at $1.334 to one euro and closed lower against the Japanese yen to 77.66.

Immediate delivery futures of Texas crude oil decreased $2.15 to $98.34 a barrel and futures of natural gas increased 2 cent to $3.44 per mbtu and gasoline prices decreased 1.9 cents to 256.78 cents a gallon.

In metals trading, copper decreased 6.03 cents to $3.49 per pound, gold fell $33.20 to $1,711.50 per ounce and silver fell $0.97 to $31.65.