Euro fears see fourth day of falls on the S&P
US stocks closed lower in a choppy session yesterday, with the S&P 500 logging its fourth straight decline as investors worried about Greece’s future as a member of the Eurozone.
Early US gains were erased after the European Central Bank said it had stopped providing liquidity to some Greek banks that had not been recapitalised. The ECB’s move caused some market confusion, adding to volatility as traders have a quick trigger finger when it comes to news about Greece.
“All eyes continue to be trained on Europe: What is going to happen in Greece, what the potential fallout from that is going to be, so there wasn’t much from the Fed data to impact things,” said Stephen Massocca of Wedbush Morgan in San Francisco.
Investors were not enticed by the minutes from the US Federal Reserve’s most recent meeting in which policymakers kept alive the possibility of a fresh round of monetary stimulus for the moderately expanding economy.
Worries about Greece’s political and financial future, along with political upheaval in the broader Eurozone, have driven equity losses in recent weeks, sending the benchmark S&P index down 5.9 per cent since the end of March.
German chancellor Angela Merkel attempted to assuage investor fears on Tuesday by saying Greece will stay in the euro. Merkel’s comments helped stem selling prior to the market open.
Opinion polls in Greece show leftists who are opposed to the terms of the international bailout for the country would likely win a new election, set for 17 June. Greeks, afraid of the devaluation that would follow an exit from the euro, withdrew at least €700m euros from local banks on Monday.
J.C. Penney shares plunged 19.7 per cent to $26.75, its biggest one-day percentage drop since at least 1973, a day after the department store owner scrapped its dividend. Penney’s financial results showed the effort to remake itself as an affordable fashion-oriented retail chain took a much bigger-than-expected toll on sales in the first quarter.
The Dow Jones industrial average dropped 33.45 points, or 0.26 per cent, to 12,598.55. The Standard & Poor’s 500 Index dropped 5.86 points, or 0.44 per cent, to 1,324.80. The Nasdaq Composite Index dropped 19.72 points, or 0.68 per cent, to 2,874.04.
US output rose in April at its fastest pace in over a year, the Federal Reserve said. A separate report showed a rebound in groundbreaking for US homes in April, suggesting the housing market recovery was gaining.