Stocks sink on concerns about Europe
A painful sell-off in European stock markets spilled into the U.S., sparking a broad-based decline that illustrated investor unease with the economic and political upheaval in Europe.
The Dow Jones industrial average fell more than 100 points Monday as worry grew that Europe’s sovereign debt crisis, which seemed to be resolving itself only weeks ago, could be worsened by deepening economic strangulation and public outrage at government-imposed austerity measures.
Investors were rattled by data showing contraction in European business and manufacturing. They also were unnerved by the French presidential race, in which President Nicolas Sarkozy trailed his Socialist Party opponent in the first round of voting, and by the Dutch prime minister’s offer to resign in the face of a backlash against spending cuts he engineered.
The Dow dropped 102.09 points, or 0.8%, to 12,927.17. The Standard & Poor’s 500 index sagged 11.59 points, or 0.8%, to 1,366.94. The Nasdaq composite index slid 30 points, or 1%, to 2,970.45.
The carnage was far worse overseas, as the early-year recovery in European markets continued to reverse course.
Stocks declined 3.4% in Germany, 2.8% in France and 4.6% in Stockholm.
Investors worry that falling tax receipts brought on by weak European economies could make it impossible for cash-strapped governments to make their heavy debt payments. The situation could be made worse if public opposition to government austerity plans prompts the election of lawmakers who could relax the reforms implemented thus far.
The weakness in the U.S. market continued a recent pattern in which investors are on the lookout for signs that the economic progress of the opening months of 2012 may give way to slower growth later in the year.
Shares of Wal-Mart Stores Inc. dropped 4.7% after the giant retailer announced an internal probe into allegations that the company systematically bribed Mexican officials to speed its growth in that country. The announcement followed a detailed article revealing the allegations in the New York Times.
