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Stocks drop on European debt concerns; Dow off 122
Source: Agencies |
November 30, 2010, Tuesday
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STOCKS fell sharply yesterday as concerns about the European debt crisis overshadowed a strong weekend of holiday sales.
The euro fell to a two-month low and investors flocked to the safety of the dollar and Treasurys after the European Union agreed Sunday to provide nearly US$90 billion in rescue loans for Ireland.
The move is designed to shore up Ireland's cash-strapped banks, but it does little to relieve investors' concerns about other European countries, including Portugal and Spain.
"The good news is they're making progress with Ireland," said Alan Gayle, senior investment strategist for RidgeWorth Investments. "The concern is that there is more work left to do for the EU going forward."
As a result, traders largely ignored the upbeat news on holiday retail sales in the U.S. The National Retail Federation, a trade group, estimated that 212 million shoppers visited stores and websites during the first weekend of the holiday season, up from 195 million last year.
Online spending also rose more than 14 percent from Thanksgiving Day through Saturday, according to IBM's Coremetrics. Shares of online retailer Amazon.com rose US$2.06, or 1.2 percent, to US$179.30 in the afternoon of what's known as "Cyber yesterday," a day when shoppers return to work and buy items online.
A fuller picture on spending will come Thursday when retailers report their November revenue. Investors have been hoping that consumers, who have generally been spending cautiously since the recession, would feel more comfortable about shopping during the holidays. Many economists believe that consumers will have to spend more freely for the economy to put together a stronger recovery. However it's too soon to tell if sales will remain strong through Christmas.
The Dow Jones industrial average fell 122.53 points, or 1.1 percent, to 10,969.47 in early afternoon trading. It was the first time since last Tuesday that the Dow surrendered the 11,000 level in intraday trading. Twenty-five of the 30 stocks in the average fell.
The Standard & Poor's 500 index fell 10.75, or 0.9 percent, to 1,178.65. The technology-heavy Nasdaq composite index dropped 28.05, or 1.1 percent, to 2,506.50.
Bank stocks were some of the best performers. JPMorgan Chase & Co. rose 0.3 percent, while other banks, such as Bank of America Corp., Wells Fargo & Co., Regions Financial Corp. and Comerica Inc., all rose more than 1 percent.
Joe Morford, a banking analyst at RBC Capital Markets, issued a note to clients yesterday saying he expected several banks to raise their dividends in the first quarter of 2011 as they comply with new capital requirements from the Federal Reserve.
European stocks traded sharply lower.
Oil prices rose US$1.66 to US$85.41 a barrel. Gold for February delivery rose US$3.00, or 0.2 percent, to US$1,367.80 an ounce.
The dollar rose 0.8 percent against an index of six other currencies.
Bond prices rose as investors shifted money out of riskier assets like stocks and commodities and into defensive investments. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.84 percent yesterday from 2.87 percent Friday.
Investors were also cautious as they awaited the week's economic reports, including the government's monthly employment report due out on Friday. Also due this week are the Conference Board's survey of consumer confidence on Tuesday, and the Institute for Supply Management's assessments of the manufacturing and services industries.
The euro fell to a two-month low and investors flocked to the safety of the dollar and Treasurys after the European Union agreed Sunday to provide nearly US$90 billion in rescue loans for Ireland.
The move is designed to shore up Ireland's cash-strapped banks, but it does little to relieve investors' concerns about other European countries, including Portugal and Spain.
"The good news is they're making progress with Ireland," said Alan Gayle, senior investment strategist for RidgeWorth Investments. "The concern is that there is more work left to do for the EU going forward."
As a result, traders largely ignored the upbeat news on holiday retail sales in the U.S. The National Retail Federation, a trade group, estimated that 212 million shoppers visited stores and websites during the first weekend of the holiday season, up from 195 million last year.
Online spending also rose more than 14 percent from Thanksgiving Day through Saturday, according to IBM's Coremetrics. Shares of online retailer Amazon.com rose US$2.06, or 1.2 percent, to US$179.30 in the afternoon of what's known as "Cyber yesterday," a day when shoppers return to work and buy items online.
A fuller picture on spending will come Thursday when retailers report their November revenue. Investors have been hoping that consumers, who have generally been spending cautiously since the recession, would feel more comfortable about shopping during the holidays. Many economists believe that consumers will have to spend more freely for the economy to put together a stronger recovery. However it's too soon to tell if sales will remain strong through Christmas.
The Dow Jones industrial average fell 122.53 points, or 1.1 percent, to 10,969.47 in early afternoon trading. It was the first time since last Tuesday that the Dow surrendered the 11,000 level in intraday trading. Twenty-five of the 30 stocks in the average fell.
The Standard & Poor's 500 index fell 10.75, or 0.9 percent, to 1,178.65. The technology-heavy Nasdaq composite index dropped 28.05, or 1.1 percent, to 2,506.50.
Bank stocks were some of the best performers. JPMorgan Chase & Co. rose 0.3 percent, while other banks, such as Bank of America Corp., Wells Fargo & Co., Regions Financial Corp. and Comerica Inc., all rose more than 1 percent.
Joe Morford, a banking analyst at RBC Capital Markets, issued a note to clients yesterday saying he expected several banks to raise their dividends in the first quarter of 2011 as they comply with new capital requirements from the Federal Reserve.
European stocks traded sharply lower.
Oil prices rose US$1.66 to US$85.41 a barrel. Gold for February delivery rose US$3.00, or 0.2 percent, to US$1,367.80 an ounce.
The dollar rose 0.8 percent against an index of six other currencies.
Bond prices rose as investors shifted money out of riskier assets like stocks and commodities and into defensive investments. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.84 percent yesterday from 2.87 percent Friday.
Investors were also cautious as they awaited the week's economic reports, including the government's monthly employment report due out on Friday. Also due this week are the Conference Board's survey of consumer confidence on Tuesday, and the Institute for Supply Management's assessments of the manufacturing and services industries.
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