Wall Street is unimpressed by Spain deal

US stocks fell yesterday as Europe’s aid package for Spanish banks did little to alleviate investor concerns about the Eurozone’s finances and a slowdown in the wider global economy.

The equity market bounced in early trading, but the rally was quickly snuffed out by sellers and a sharp decline accelerated into the market’s close.

Spanish bond yields rose as a €100bn bailout the country’s struggling banks failed to quell concerns that Madrid may be locked out of funding markets and forced to seek external help.

“They’re borrowing more money, not doing anything about growth,” said Paul Zemsky, head of asset allocation at ING Investment Management. “Today we’re not worried about Spain’s banking system falling off a cliff, but other than that, nothing has changed.”

The New York-traded stock of Spanish lender Santander fell 3.1 per cent to $5.92. Weakness in Europe’s financial sector was mirrored in the United States where the S&P financial index fell 1.9 per cent and was the weakest performing sector.

Shares of Morgan Stanley, which has recently been a barometer of concerns about Europe due to perceptions of the investment bank’s exposure to the region, fell 2.5 per cent to $13.37.

The Dow Jones industrial average dropped 142.97 points, or 1.14 per cent, to 12,411.23. The Standard & Poor’s 500 Index fell 16.73 points, or 1.26 per cent, to 1,308.93.

The Nasdaq Composite Index lost 48.69 points, or 1.70 per cent, to 2,809.73.

Trading volume was light on the NYSE, Nasdaq and AMEX with 6bn shares traded, about 14 per cent below its 10-day moving average. About four shares fell for every one that rose on NYSE.

US companies are finding it more difficult to increase revenue now than at just about any time since the financial crisis. Firms that make up the S&P 500 are expected to boost sales by just 2.2 per cent in the current quarter, according to Thomson Reuters data.

AK Steel Holding tumbled 14 per cent to $4.99 after two brokerages cut their ratings on the small cap, including a “sell” rating from Goldman Sachs, which cited a highly leveraged balance sheet and weak steel prices.

Apple’s shares fell 1.6 per cent to $571.17 after it took the wraps off its own mobile mapping service and made its enhanced Siri voice-search available for iPads. Google’s shares fell 2.1 per cent to $568.50 after Apple said it hoped to take on the internet giant with its new maps service.