Business

U.S. Stocks Plunge Amid European Economic Fears

U.S. Stocks Plunge Amid European Economic Fears

UNITED STATES (AP): U.S. stocks plunged Friday, erasing the week’s gains, as rising fears about fallout from Europe‘s debt crisis overshadowed President Barack Obama’s plan to revive the U.S. job market.

The resignation of a key official from the European Central Bank was the latest sign of deepening disagreement over how to solve Europe’ economic problems. And investors have to wonder whether the president’s jobs plan can pass through a divided Congress.

At 12:20 p.m. Eastern time, the Dow Jones industrial average fell 298 points, or 2.6 percent, to 10,998. The S&P 500 index dropped 31, or 2.6 percent, to 1,155. The Nasdaq composite index skidded 60 points, or 2.4 percent, to 2,469.

All three indexes are lower for the week. The Dow is down more than 2 percent. It has fallen in five of the past six weeks, and four of the past five trading sessions.

Juergen Stark, the top economist at the ECB, resigned shortly after the market opened. He was an advocate for higher interest rates. Published reports said he left because he opposed the bank’s extensive purchases of debt issued by heavily-indebted member nations.

Stark‘s resignation came as financial leaders from the world’s most developed economies are meeting in France to hash out plans for reviving the struggling global economy.

On Thursday evening, President Obama unveiled a $447 billion package of tax cuts and new spending aimed at boosting hiring. He spent much of the speech challenging Congress to put aside political theatrics and pass the bill.

It’s not clear whether that can happen. Republicans control the House and many of them oppose any new spending. Some reacted by calling the plan a rehash of failed strategies.

Friday’s plunge continues a tough quarter for stock markets. Fears about the spreading debt crisis in Europe and the slowing global economy have encouraged traders to sell shares and make bets seen as less risky.

The S&P 500 is down 10 percent since the third quarter started in July. However, it has recovered almost 6 percent since its lowest close this year on Aug. 8.

Analysts said shares are likely to keep falling because conditions in Europe show little sign of improving. If Europe’s economy contracts, U.S. companies will likely be hurt. Half of their revenue comes from overseas, and half of that is from Europe, said Sam Stovall, chief investment strategist with Standard & Poor’s in New York.

“Maybe the market has already priced in a very, very soft spot, but it has not priced in quicksand – it has not priced in a recession,” he said.

Stovall said recent data make another U.S. recession appear more likely.

The government reported at 10 a.m. that sales for wholesale businesses were flat in July. It was the worst result since May.

Jittery investors have snapped up investments seen as safe, sending Treasury yields to historic lows. The yield on the 10-year Treasury note plunged to 1.95 percent Friday from 2.02 percent earlier in the day. On Monday, the 10-year yield fell to 1.91 percent, the lowest since the Federal Reserve Bank of St. Louis began keeping daily records in 1962.

Markets in Europe skidded lower after the news from the ECB. France‘s CAC 40 and Germany’s Dax fell about 4 percent. London’s FTSE lost more than 2.

McDonald’s Corp. shares fell after the company said a key revenue metric missed analysts’ expectations. McDonald’s said that revenue at restaurants open at least 13 months rose 3.5 percent in August. Analysts had expected a 4.9 percent increase.

Shares of Bank of America Corp. fell nearly 3 percent after The Wall Street Journal that it might cut up to 14 percent of its workforce as part of a massive restructuring. Bank of America already has cut at least 6,000 jobs this year. CEO Brian Moynihan announced a management shake-up this week.

Comments (30)

  • king jack rabbit
    Posted on September 11, 2011 at 11:23pm

    every time oboma speaks the market go down

    Report Post »  
  • king jack rabbit
    Posted on September 11, 2011 at 11:21pm

    this happens every time looser oboma has a speech

    Report Post »  
  • ilovepotatoes
    Posted on September 10, 2011 at 9:57pm

    I’m concerned about upcoming food prices. I know the northeast is mostly drowned out, and out west is very dry; with gas prices high it is hard for me to imagine food prices not going up some, we export a lot of food, too, huh?

    Report Post »  
  • TomFerrari
    Posted on September 10, 2011 at 9:19am

    EVERY time obama speaks, this happens.

    EVERY STINKING TIME ! ! !

    Only the AP and the socialist democrat “USEFUL IDIOTS” as obama calls them, would fail to see this 100% CORRELATION.
    .
    .
    .Obama IS THE PROBLEM, so, by definition, HE CANNOT solve it…
    .
    .
    .
    UNLESS he chooses to resign for the good of the country ! ! !
    .
    .

    Report Post » TomFerrari  
  • reform
    Posted on September 10, 2011 at 2:05am

    I guess when Glenn put out MAP he was wrong then too? Seems funny it is now coming to pass, yes or no? Question is why is Germany not being hurt by all this?

    Report Post »  
  • miles from nowhere
    Posted on September 10, 2011 at 1:13am

    The plunge is also because of Obama!

    Report Post »  
  • Cosmos102
    Posted on September 9, 2011 at 11:54pm

    The Markets need to grow some collective “balls”. Their show of “no confidence” in the American people and its system for correcting its mistakes is getting tiring. Obozo is a one termer and his so called speech was nothing but a stunt to incite violence among his followers when he can say “Republicans didn’t pass the bill”…and then drum up support for his weak and floundering presidency. Unfortunately for Obozo, the writing is already on the wall. Start packing Buddy!

    Report Post » Cosmos102  
  • MUDFLAPS
    Posted on September 9, 2011 at 10:06pm

    it was because of ovamits speech.

    Report Post »  
  • Snowleopard {gallery of cat folks}
    Posted on September 9, 2011 at 2:31pm

    Notice the influence Mr Obama has on economical matters:

    Business — he calls it a success, it goes bankrupt and closes.
    Stocks — he calls it a recovery, it collapses.
    Economy — he calls it a recovery, it is a depression.
    Military — he calls it victory, we are running away on his orders.

    Democrats — he says he will speak for their candidates, they scream “NO WE WILL LOSE!!!”
    At least in this case he would be effective at something.

    Understand people, when, no longer if, barring a miracle, the European Union goes under, then we will be next unless the nation is ready to face the shockwaves coming across the Atlantic.We can weather the storm, as long as we are prepared; and with this President, he does not want that to be the case at all.

    http://artinphoenix.com/gallery/grimm (cat folk art)

    Report Post » Snowleopard {gallery of cat folks}  
    • TomFerrari
      Posted on September 10, 2011 at 9:16am

      .
      Mutually
      Assured
      Economic
      Destruction
      .

      Report Post » TomFerrari  
    • madmanmc
      Posted on September 10, 2011 at 11:55am

      Oh hell if it keeps going the way it is it will not MAED it will be M A D

      Mutually
      Assured
      Destruction
      and there will only one way out like in 1940s war sorry but hey it is what it is if we dont stand together and do what is needed and righteous in GOD I TRUST

      Report Post » madmanmc  
  • tobywil2
    Posted on September 9, 2011 at 1:38pm

    Obama’s speach confirming the cartoon: http://commonsense21c.com/images/cronyism-2.jpg was the cause

    Report Post » tobywil2  
  • bandi9
    Posted on September 9, 2011 at 1:23pm

    are you freakin kidding me? Obama’s speech has as much if not more to do with the tanking of stocks. AP, you are so transparent now. So the Euro situation “overshadowed” Obamas wonderful speech? what idiots

    Report Post »  
  • Rayblue
    Posted on September 9, 2011 at 1:20pm

    The marxist merry go round is losing grease and the ball bearings are shot.
    But it’s still spinning like a buzz saw on crack.
    As soon as it’s unhinged, it’ll fly off into outer space. Leaving a carnival of errors behind.
    We can use it as a space station when Captain Zeros gone on permanent vacation.

    Report Post » Rayblue  
  • axeptance449
    Posted on September 9, 2011 at 1:13pm

    LMAO your bile flows so swiftly by posting that the market is down because of European unrest you have totally missed the chance to blame it on President Obama’s speech last evening.

    Report Post »  
  • Sleazy Hippo
    Posted on September 9, 2011 at 1:08pm

    I am buying Gold. I will pay $660.00 a Troy ounce.

    Report Post » Sleazy Hippo  
  • Delores at CH WV
    Posted on September 9, 2011 at 1:06pm

    Someone in the our Government or another World Leader must ask Obama to stop giving speaches. These speaches could lead to the biggest Financial Depression in History.of the Planet!!!!! Of course, he now plans to waste more taxpayer money on the stump . . . repeating his speach. Richmond today, where next?

    When this man speaks, the Earth trimbles!!!! God save us, please?

    Report Post »  
  • americathebankrupt
    Posted on September 9, 2011 at 1:00pm

    We are one to three years away from a global economic collapse.

    Report Post » americathebankrupt  
    • vennoye
      Posted on September 9, 2011 at 1:27pm

      You are really an optimist with the three year spread.

      Report Post » vennoye  
    • Rosco Jones
      Posted on September 10, 2011 at 10:39pm

      You are so very correct on a global economic collapse.
      I do feel you may be rushing it, just a little.
      America needs to become as self sufficient as possible.
      We can’t count on always getting what we need from other countries.
      Lack of food, water and energy is going to cause some big changes.

      Report Post » Rosco Jones  
  • bankerpapaw
    Posted on September 9, 2011 at 12:53pm

    So the stock market has absolutely no confidence in Obama. No worry. The rest of the nation
    doesn’t either.

    Report Post »  
  • Psychosis
    Posted on September 9, 2011 at 12:48pm

    this is the markets response to oblablas campaign speech last night

    Report Post » Psychosis  
  • Vechorik
    Posted on September 9, 2011 at 12:47pm

    In 2008, more than half of the stimulus/bailout money (our tax dollars) went through Congress to the Fed and on to bail out foreign banks.

    In a recent discovery, this money was loaned out through a special lending facility knows as St OMO, which gave foreign banks loans at .01% (virtually free), while at the same time charging American institutions .5% at the Fed window.

    American people have little idea that their tax money, originally loaned out by the Fed to foreign banks in 2008, has helped create the debt crisis in Europe that is now taking place in Greece, Ireland, and the other PIIGS nations.

    full article:
    http://www.examiner.com/finance-examiner-in-national/ron-paul-shows-how-the-fed-helped-create-euro-crisis-through-foreign-bank-loans

    Report Post »  
  • vennoye
    Posted on September 9, 2011 at 12:41pm

    Ah, if only people and investors were as stupid as government leaders want them to be……

    Report Post » vennoye  
  • cntrlfrk
    Posted on September 9, 2011 at 12:39pm

    ‘
    Wheeee!

    Here comes 10,000!

    Party like it’s 1999 babeeee!

    ./

    Report Post » cntrlfrk  
  • Gonzo
    Posted on September 9, 2011 at 12:37pm

    When Obama speaks, the market listens…and drops like a rock.

    Report Post » Gonzo  
  • cntrlfrk
    Posted on September 9, 2011 at 12:37pm

    ‘

    European Economic Fears???

    LMAO!

    I think you mean “American”

    .

    Report Post » cntrlfrk  

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