US stocks slide on economic tremors from Europe
(AP) NEW YORK - A collection of worrying news out of Europe sent stocks sharply lower on Wall Street Monday morning.
New reports showed that European government debt continues to pile up despite severe budget cuts that have led to unrest across the continent. European markets fell hard.
The Dow Jones industrial average dropped 134 points to 12,895 as of 11 a.m. in New York.
"The main concern today is the stability of the euro zone as a whole," said Dan Greenhaus, chief global strategist at the brokerage BTIG.
Figures reported by the European Union's statistics office confirmed the effects of budget-cutting programs on countries that use the euro currency. Even with widespread spending cuts, overall debt rose to 87.2 percent, the highest level since the euro was created.
Separately, a survey of the euro zone's manufacturing and services sectors unexpectedly fell in April.
Results of the first round of presidential elections in France was also a cause for concern. The incumbent Nicolas Sarkozy came in second behind Francois Hollande, a critic of austerity as a way out of the debt crisis. The partnership between Sarkozy and Germany's Angela Merkel has been crucial to negotiations over Europe's debt crisis.
"To the extent that Europe has any leaders, it's very much Merkel and Sarkozy," Greenhaus said. "If Sarkozy were to lose, you'd change the leadership of Europe at arguably the worst possible time."
Europe's major indexes fell hard. France's CAC-40 index dropped 2.9 percent. Germany's main index fell even more, 3.6 percent. The euro fell against the dollar.
In the U.S., the Standard & Poor's 500 index fell 16 points to 1,362. The Nasdaq composite fell 48 points to 2,952.
Treasury prices rose as traders shifted money into assets considered safe. The price of the 10-year Treasury note rose 50 cents for every $100 invested. That pushed its yield down to 1.91 percent from 1.96 percent late Friday.
Trouble in Europe is hurting Kellogg, which slashed its full-year forecast, blaming weak sales. Hasbro posted a first-quarter loss on falling sales and costs related to cutting jobs. Kellogg dropped 5 percent and Hasbro 4 percent.
Wal-Mart Stores sank 4 percent following a report in The New York Times about an alleged bribery campaign involving top executives at a Mexican subsidiary. The retailer said it was investigating for any breach of the U.S Foreign Corrupt Practices Act.