Fears over looming debt crisis spook US markets
INVESTORS dumped US stocks yesterday in Wall Street’s worst session in three months on the fear that even with a bailout for Greece, Europe’s debt crisis could spread to other weak euro zone countries.
The sell-off echoed a wave of fear that gripped financial markets as investors fretted the crisis in Europe could derail the global economic recovery. A gauge of investor fear jumped more than 18 per cent.
Big exporters to Europe including technology and industrial companies tumbled, with Hewlett-Packard off 3.9 per cent to $50.64 and Caterpillar down 4.6 per cent to $66.70.
“It looks like we’ve got some profit-taking on early-cycle exporters, companies with a big global presence over in Europe,” said Fred Dickson, chief market strategist at D.A. Davidson in Lake Oswego, Oregon.
Basic materials shares tumbled as the euro hit a one-year low against the US dollar. The Reuters-Jefferies commodity index and the S&P materials index both posted their worst day since early February, sliding 2.3 per cent and 3.5 per cent, respectively.
The Dow Jones industrial average lost 225.06 points, or 2.02 per cent, to 10,926.77. The Standard & Poor’s 500 Index fell 28.66 points, or 2.38 per cent, to 1,173.60. The Nasdaq Composite Index dropped 74.49 points, or 2.98 per cent, to 2,424.25.
Airline shares shed 5.4 per cent.