Dow ends down around 350 after wild freefall - KTTC Rochester, Austin, Mason City News, Weather and Sports

Dow ends down around 350 after wild freefall


NEW YORK (AP) -- Stocks plunged Thursday as investors succumbed to fears that Greece's debt problems would halt the global economic recovery. In about a half-hour Thursday, the Dow Jones industrials slid almost 1,000 points before recovering to end the day off about 350 points.

The sudden drop was a painful flashback to the worst days of the 2008 financial crisis. Computer programs intensified the selling while investors watched protests in the streets of Athens on TV. Fears are running high in the financial markets that the Greek government will not be able to implement austerity measures that would enable it to contain its debt problems. And, in turn, that the country's problems will hurt other economies in Europe and even the U.S.

The New York Stock Exchange confirmed to Reuters there were no system errors during the volatile trading in the afternoon that drove the Dow and the Nasdaq down more than 9 percent.

The Dow's gyrations showed the high emotions in the markets. Down 998.50 points in mid-afternoon, it recovered less than an hour later to a loss of 328. Meanwhile, interest rates on Treasurys soared as investors sought the safety of U.S. government debt. The yield on the benchmark 10-year note, which moves opposite its price, fell to 3.37 percent from late Wednesday's 3.54 percent.

"The market is now realizing that Greece is going to go through a depression over the next couple of years," said Peter Boockvar, equity strategist at Miller Tabak. "Europe is a major trading partner of ours, and this threatens the entire global growth story."

According to preliminary calculations, the Dow ended down 347.80, or 3.20 percent, to 10,520.32. It traded below 10,000 for less than a half hour.

The Standard & Poor's 500 lost 37.72, or 3.24 percent, to end at 1,128.15. The Nasdaq lost 82.65, or 3.44, to end at 2,319.64.

The stock market has had periodic bouts of anxiety about the European economies during the past few months. They have intensified over the past week even as Greece appeared to be moving closer to getting a bailout package from some of its neighbors.

The fear now is that other countries will also be overwhelmed by their debt, and the recovery that is in its early stages will be wiped out. That would almost inevitably affect the U.S. recovery.

The losses in stocks were so widespread that just 161 stocks rose on the New York Stock Exchange, compared to 3,008 that fell. The major indexes were all down more than 3 percent.

Greece passed a bill in its Parliament after heated debate that calls for unpopular cuts in public spending in pensions and other areas, as well as tax increases. Greece needed to approve the austerity measures to be eligible to receive a $141.9 billion aid package from the International Monetary Fund and the 15 other countries that use the euro.

Greece needs access to an initial portion of the money by May 19 to cover $11.6 billion in debt payments, or it likely will default.

Even if Greece gets the money, there are still worries that the loans would be only a temporary fix to a growing debt problem across the continent. Portugal and Spain have also seen their debt ratings downgraded.

In economic news, the Labor Department said new claims for jobless benefits fell lass than expected last week. It also said productivity rose more than forecast in the first quarter, but that was due in part to a drop in labor costs, which is a negative signal for consumer spending. The report comes a day ahead of the government's April jobs report. It is widely seen as the most important economic report.

Treasury prices rose, pushing interest rates down in the bond market. The yield on the benchmark 10-year Treasury note fell to 3.44 percent from 3.54 percent late Wednesday.

Crude oil fell $2.81 to $77.16 per barrel on the New York Mercantile Exchange.

The Labor Department's weekly report on initial jobless claims showed 444,000 workers applied for unemployment benefits last week. That's down from a week earlier, but fell short of the 440,000 estimated by economists polled by Thomson Reuters.

It was the third straight weekly drop in new claims, but economists say claims have not yet fallen to levels that would indicate consistent job growth. Initial claims would have to dip to around 425,000 to signal employers are adding jobs. High unemployment remains one of the key issues facing the U.S. economy.

"Even though we didn't hit a home run with it, we hit a single," Larry Rosenthal, president of Financial Planning Services in Manassas, Va., said of the report. "This a process we have to work through. This is a long-term recovery."

The weekly claims report comes a day before the Labor Department is expected to say the unemployment rate remained at 9.7 percent in April. An improving employment picture could boost consumer sentiment and make people more optimistic about a recovery.

"It's a whole lot easier to be confident when you have a job," said Bryan Hopkins, president of Hopkins Wealth Management Group in Anaheim Hills, Calif.

A separate Labor Department report showed first-quarter productivity rose at an annual rate of 3.6 percent, better than the 2.5 percent forecast by economists. The gain was due in part to a drop in labor costs, which means companies should be able to maintain strong profit margins. However, it also means that consumers' incomes continue to be squeezed, which could slow a rebound in spending.

That slow recovery in spending was seen as retailers provided a mixed picture for April sales. Sales largely slowed from March's strong pace, partly because Easter was earlier this year. Macy's Inc. was among the retailers that topped forecasts, but its shares still slid. Gap Inc. and Target Corp. fell sharply after reporting disappointing monthly sales results.




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