By Steven Russolillo
Nov 1 2011
--Europe roiled by Greece's decision to hold bailout referendum
--Data on manufacturing activity fall a bit below economists' expectations
The Dow Jones Industrial Average sank 297.05 points, or 2.5%, to 11657.96. Bank of America led the Dow lower, falling 43 cents, or 6.3%, to $6.40, while J.P. Morgan Chase dropped 2.05, or 5.9%, to 32.71.
The Dow has dropped 4.7% over the last two trading days.
"The market is rapidly running out of confidence that Greece will get its house in order, pronto," said Peter Kenny, managing director at Knight Capital Group. "There is real concern over this Greek referendum. This was an unexpected event that was nowhere on the horizon. And unexpected events are generally not well received by the market."
At one point on Tuesday it looked like Greek Prime Minister George Papandreou's referendum plans appeared to fizzle. But minutes before the U.S. close, reports suggested Greece still will move ahead with the referendum, pushing stocks to close near session lows.
The Standard & Poor's 500-stock index sank 35.02 points, or 2.8%, to 1218.28. It marked the index's worst start to the month of November since 1932, according to Howard Silverblatt, S&P's senior index analyst. The index has declined 5.2% over the last two days.
All 10 of the S&P 500's sectors fell on Tuesday, with financial stocks posting the sharpest declines. Morgan Stanley slid 1.41, or 8%, to 16.23, Citigroup fell 2.42, or 7.7%, to 29.17, and Goldman Sachs Group declined 6.01, or 5.5%, to 103.54.
MF Global shares will begin trading in the over-the-counter market on Wednesday after the New York Stock Exchange suspended the distressed broker's listing late Tuesday afternoon. The stock will trade under the ticker symbol MFGLQ.
Shares dropped 66% last week as the company suffered from its exposure to European sovereign debt. The stock was halted early Monday morning, hours before the company filed for bankruptcy protection. Shares are expected to open sharply lower on Wednesday.
The technology-oriented Nasdaq Composite fell 77.45 points, or 2.9%, to 2606.96.
Greek government officials have said voting for the referendum could deflate opposition against cuts in salaries, pensions and government spending. But a "no" vote eventually could propel Greece out of the euro.
Stocks surged in October on Europe's plan to combat Greece's debt issues, expand a bailout fund and recapitalize the region's biggest banks. But critics said the rally lacked concrete improvements in Europe's debt situation, which have been exposed this week.
"The biggest mistake investors made in October was this illusion that any solution was going to be fast and efficient," said Jeffrey Sica, president and chief investment officer of Sica Wealth Management. "There's going to be a tremendous amount of pain implementing whatever ultimately comes out of this. This is going to be a long-term, painful problem. There isn't a quick-fix solution."
Concerns over European economic growth also weighed on sentiment after data showed that the U.K.'s manufacturing sector contracted in October against expectations of slight expansion.
In Europe, the Stoxx Europe 600 declined 3.5%. Germany's DAX index tumbled 5%, while France's CAC-40 skidded 5.4%.
Asian bourses were mostly lower as well, with Japan's Nikkei Stock Average closing down 1.7% and Hong Kong's Hang Seng Index sliding 2.5%.
On the economic calendar, the U.S. manufacturing sector barely expanded last month, according to the Institute for Supply Management. Spending on construction in the U.S. inched ahead during September, which met economists' expectations. But the sector continues to struggle with weak demand for new projects.
In the currency market, the news out of Europe pushed the dollar higher against the euro amid fears that a Greek vote could jeopardize monetary union across the 17-nation bloc.
In corporate news, Pfizer reported third-quarter results that exceeded expectations, lifted its full-year earnings and revenue outlook and increased its target amount for 2011 share repurchases. The pharmaceutical company was the Dow's lone gainer, rising seven cents, or 0.4%, to 19.33.
Credit Suisse Group said it will cut an additional 3% of its work force and shrink its investment bank after revenue at the unit collapsed in the third quarter. The Swiss bank will accelerate efforts to reduce costs and adapt to tougher banking rules. Shares dropped 2.26, or 7.8%, to 26.71.
Exelixis tanked 3.11, or 40%, to 4.62, after the company said it was launching a Phase-3 trial of its prostate cancer treatment even though it didn't have an agreement with the Food and Drug Administration over certain guidelines.
Baker Hughes gave up 4.45, or 7.7%, to 53.54, after the oil-field-services company's third-quarter earnings rose but missed expectations.
CME Group reported third-quarter earnings that topped estimates but revenue fell short of forecasts. Shares dropped 23.68, or 8.6%, to 251.88.
No comments:
Post a Comment