Friday, Jun 22, 2018
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World stocks fall amid fear on Greek debt

NEW YORK - Stocks plunged around the world yesterday 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 lost 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. Meanwhile, Treasury prices rose on increased demand for safe investments.

Stocks have seesawed in the last week as European countries' 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 problems in Greece and other countries could spill over to the rest of Europe and in turn, the United States.

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, which was reached on Feb. 8. Investors have spent the last three months largely shrugging off the problems in Europe and focusing instead on the continuing signs of improvement in the U.S. economy.

The stock drop was 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.

The Dow fell 225.06, or 2 percent, to 10,926.77, its lowest close since April 7. The Dow was down as much as 283 points at its low of the day.

The S&P 500 index fell 28.66, or 2.4 percent, to 1,173.60. As with the Dow, the drop was the worst since Feb. 4.

The Nasdaq composite index fell 74.49, or 3 percent, to 2,424.25. The Nasdaq's more intense drop reflected the fact that it includes smaller companies seen as riskier investments than the big names in the Dow or S&P 500.

Investors rushed to safer holdings like Treasurys, pushing interest rates sharply lower. The yield on the benchmark 10-year note fell to 3.6 percent from 3.69 percent late Monday.

The euro again fell against the dollar as traders turned away from the currency used by 16 European Union countries including Greece. When investors start doubting a country's economic strength, they tend to sell its currency.

Anthony Chan, chief economist at J.P. Morgan Private Wealth Management in New York, said Greece's troubles aren't enough to spoil a global rebound but that investors are concerned that this small hole in the world economy will become bigger.

"My suspicion is that this won't end up being large enough to really cause the kind of problems that the market is obsessed with," he said.

In Greece yesterday, angry unionists took to the streets to protest harsh austerity measures imposed under an international bailout to save the country from looming bankruptcy.

About 4,000 striking teachers and students marched in Athens to protest the cuts, carrying black flags, while some scuffled with police.

The cuts were announced on Sunday as a precondition for the loans from the International Monetary Fund and the other 15 EU countries using the euro.

Early today, a general strike by Greek unions was halting flights, trains, and ferries and paralyzing public services.

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