European debt fears hit US stocks

European debt fears hit US stocks

Fears over European debt are once again playing havoc with Wall Street.

The Dow Jones industrial average closed down 97.03 points, or 0.8%, at 12,835.06.

The Standard & Poor’s 500 index and Nasdaq composite average both closed well above their lows for the day. The S&P fell 9.14 points, or 0.7%, to 1,354.58. The Nasdaq dropped 11.56, or 04 %, to 2,934.71.

Stocks pitched downwards in the United States as borrowing rates climbed for Spain and Italy, a sign that investors are losing confidence in those countries’ finances.

Spain’s 10-year borrowing rate leapt to 6.06% from 5.70% early on Tuesday. Many fear that Spain, strangled by high unemployment and a property market collapse, could be the next nation to require financial rescue.

The Dow has now fallen for six consecutive days, its longest losing streak since last summer.

The Dow soared 2,624 points, or 25%, from October 3 through May 1 as European leaders appeared to get a handle on the debt crisis. Last autumn, nations that use the euro agreed to enforce budget discipline across the region.

Since May 1, when the Dow closed at a four-year high, worries about Europe have resurfaced. In elections on Sunday, Greek and French voters ousted leaders who had imposed tough spending cuts to soothe investors.

In the six losing days that ended today, the Dow gave back 444 points - one-sixth of the points it gained during its eight-month rally.

The atmosphere is starting to resemble last year’s as traders sell anything deemed risky based on the latest headlines from Europe, said Peter Tchir, who trades a range of investments for his hedge fund TF Market Advisors.

“The concern in Spain is at such a high level that people trade the indexes or big futures contracts and are less discriminating about what risk they’re taking on,” he said.

Today, prices fell for commodities such as energy, copper and silver that are needed to sustain broad economic growth but are less valuable when the economy is weaker and demand wanes.

Benchmark crude oil, which sold for about 110 US dollars per barrel earlier this year, fell below 100 dollars last week and kept sliding. It closed below 97 dollars today on the New York Mercantile Exchange, continuing its longest decline since last July.

Commodity prices also were under pressure because the dollar rose against the euro, sending the euro down as low as 1.2910 US dollars, its lowest point since January 23. Commodities are traded in dollars, so a strong dollar makes them appear more expensive to investors who hold foreign currencies.


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