Dow Plummets 225 Points amid Greece Aid Fears
The new Car Land attraction is seen June 5, 2012 at Disney California Adventure in Anaheim, Calif. / AP Photo/Nick Ut
Updated at 4:23 p.m. ET
Stocks plunged around the world Tuesday as fears spread that Europe's attempt to contain Greece's debt crisis would fail. The euro fell to its lowest point against the dollar in a year.
The Dow Jones industrial average fell 225 points, its biggest drop in three months. The slide erased a 143-point gain from Monday. The Dow and broader indexes each fell more than 2 percent. Treasury prices rose on increased demand for safe investments.
Stocks have seesawed in the past week as Europe's efforts to agree on a bailout package for Greece proceeded in fits and starts. An agreement finally came together over the weekend, but its ballooning size of $144 billion has investors worried that Europe would have an even tougher time assembling an aid package if a larger country such as Spain or Portugal were to get in trouble. Traders are concerned that weakening economies in Europe could jeopardize the recovery in this country.
The market's plunge wasn't a surprise to some analysts who have warned for weeks that stocks were due for a retreat. After Monday's rally, the Standard & Poor's 500 index was up almost 14 percent from its 2010 low of 1,056.74, reached Feb. 8. Investors have spent the past three months largely shrugging off the problems in Europe and focusing instead on the continuing signs of improvement in the U.S. economy.
The drop in stocks brought a reminder that it doesn't take much to rattle investors who are on alert for anything that could disrupt the economic recovery. The avalanche of selling could continue while investors await answers on Greece but analysts said most drops are likely to be mild because buyers have for months been using pullbacks as opportunities to buy.
The selling Tuesday after the climb Monday was reminiscent of the fearsome swings in the fall of 2008 and early 2009 when investors were panicked over how bad the recession would get.
Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said the sudden turns in the market are to be expected as traders wrestle concerns that stocks are overheated.
"The market has kind of gotten itself into a volatile trading range," Fullman said.
The trouble in Greece gave investors enough reason to worry that other cash-strapped European governments could follow Greece into asking for emergency loans. Traders have been skeptical that Europe can act on its own restore the credibility of its shared currency, the euro.
Mike Shea, managing partner at Direct Access Partners LLC in New York, said investors are concerned that the bailout for Greece and possibly other countries could threaten a rebound in other parts of Europe.
"It's not as though even the strongest economies of Europe are doing particularly well," Shea said. "Why is a plumber in Germany going to bail out Greece or Portugal?"
According to preliminary calculations, the Dow fell 225.06, or 2 percent, to 10,926.77, its lowest close since April 7. The Dow had been down as much as 283 points at its low of the day.
The slide was the Dow's fifth move of more than 100 points in the past six days. The Dow jumped 143 points Monday after falling 159 on Friday.
The S&P 500 index fell 28.66, or 2.4 percent, to 1,173.60. The Nasdaq composite index fell 74.49, or 3 percent, to 2,424.25.
© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Stocks plunged around the world Tuesday as fears spread that Europe's attempt to contain Greece's debt crisis would fail. The euro fell to its lowest point against the dollar in a year.
The Dow Jones industrial average fell 225 points, its biggest drop in three months. The slide erased a 143-point gain from Monday. The Dow and broader indexes each fell more than 2 percent. Treasury prices rose on increased demand for safe investments.
Stocks have seesawed in the past week as Europe's efforts to agree on a bailout package for Greece proceeded in fits and starts. An agreement finally came together over the weekend, but its ballooning size of $144 billion has investors worried that Europe would have an even tougher time assembling an aid package if a larger country such as Spain or Portugal were to get in trouble. Traders are concerned that weakening economies in Europe could jeopardize the recovery in this country.
The market's plunge wasn't a surprise to some analysts who have warned for weeks that stocks were due for a retreat. After Monday's rally, the Standard & Poor's 500 index was up almost 14 percent from its 2010 low of 1,056.74, reached Feb. 8. Investors have spent the past three months largely shrugging off the problems in Europe and focusing instead on the continuing signs of improvement in the U.S. economy.
The drop in stocks brought a reminder that it doesn't take much to rattle investors who are on alert for anything that could disrupt the economic recovery. The avalanche of selling could continue while investors await answers on Greece but analysts said most drops are likely to be mild because buyers have for months been using pullbacks as opportunities to buy.
The selling Tuesday after the climb Monday was reminiscent of the fearsome swings in the fall of 2008 and early 2009 when investors were panicked over how bad the recession would get.
Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said the sudden turns in the market are to be expected as traders wrestle concerns that stocks are overheated.
"The market has kind of gotten itself into a volatile trading range," Fullman said.
The trouble in Greece gave investors enough reason to worry that other cash-strapped European governments could follow Greece into asking for emergency loans. Traders have been skeptical that Europe can act on its own restore the credibility of its shared currency, the euro.
Mike Shea, managing partner at Direct Access Partners LLC in New York, said investors are concerned that the bailout for Greece and possibly other countries could threaten a rebound in other parts of Europe.
"It's not as though even the strongest economies of Europe are doing particularly well," Shea said. "Why is a plumber in Germany going to bail out Greece or Portugal?"
According to preliminary calculations, the Dow fell 225.06, or 2 percent, to 10,926.77, its lowest close since April 7. The Dow had been down as much as 283 points at its low of the day.
The slide was the Dow's fifth move of more than 100 points in the past six days. The Dow jumped 143 points Monday after falling 159 on Friday.
The S&P 500 index fell 28.66, or 2.4 percent, to 1,173.60. The Nasdaq composite index fell 74.49, or 3 percent, to 2,424.25.
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Thank you Mr. President!
Here is really what happened today:
7am - Big time money managers walk into work, glance at their computer screens, and see a sell signal from a computer program that tells them to buy and sell stocks. So they start selling...and then all their sells start triggering other traders to sell...and they start selling. Then before you know it, all the indexes like the DOW have dropped 200+ points.
So then by the end of the day, they have created a news story that the media feels obligated to try and explain to you.....so they make up some sensational and unrelated stories that sound really good...like oh, it just happened because: "oil prices went down" or "gold prices went up" or "everyone just -felt- terrified that Greece's economy will ruin the entire world's economy"....you get what I mean.
The simple truth about what happened today is that equities were just due for a correction, so everyone sold because their computers told them to sell, and then they looked for another place to park all their money for awhile, until that place becomes overbought and they dump their shares of that and the media makes up another story about it...etc, etc, etc.
I live in a relatively average American community of 130,000. Within the next 3 months, over 500 teachers and other school personnel will be layed-off, 40 local civil servants will be layed- off, and close to 30 positions that have been on-hold for open-hiring will be closed. Even at a conservative 550 person employment loss in this community, this extrapolation will add 1,200,000 new claimees to the unemployment rosters to the U.S. within the next TWO months! Most states are at or have already exceeded their unemployment compensation limits.
There are also 4,500 high school seniors graduating in this community, 90% of which will NOT be able to find employment (based on my inquiries of the BETTER students). Since they were never employed, they can not be included in the unemployment statistics (since they cannot claim unemployment benefits). This will add 10,000,000 unemployed post secondary students, at least half of which would have had summer jobs two years ago. Furthermore, many employers are now offering unpaid "internships" to graduates, taking even more adults out of the job market by replacing them with "volunteers". This means OVER 12,000,000 lost incomes and less purchasing power, to the tune of $120 Billion loss of revenue to businesses in one year from these elements alone! AND - this is coming within the next 2 (that's right TWO) months.
Bush was a complete moron and his evil minon (DC) was the epitome of hate but truthfully, is no one in THIS government (dems or repubs) thinking?! This "Depression" and the drop in the DOW is far from over.
The early years of America had some someone similiar problems as states would pin themselves against other states. It created a lack of overall cohesion.
The problem right now is that all these countries got together to try and form a currency which requires that would rival the dollar. However they are learning that part of the strenght behind the dollar is the ability of the fed to do what is necessary.
Right now that is what is really putting Europe in the position they are in right now.
It will be interesting to see what happens. As the articles states (which is true) it will affect us here in the states.
I would think that eventually internal and external forces (namely the US and China) would pressure them to do what needs to be done.
However if those pressures fail and the aid package falls apart we could be on the brink of seeing the EURO self implode.