- Title: USA: Greek vote drives Wall Street lower
- Date: 2nd November 2011
- Summary: BOSTON, MASSACHUSETTS, UNITED STATES (NOVEMBER 1, 2011) (ORIGINALLY 4:3) (REUTERS) (SOUNDBITE) (English) JEFFREY KLEINTOP, CHIEF MARKET STRATEGIST, LPL FINANCIAL, SAYING: "It's not about the Greek economy. That economy is going to be in a recession, maybe even a depression for years to come. The overall European economy likely to be in recession in the year ahead. It's more about the contagion of that into the banking sector and perhaps other U.S. financial securities that's raised the concern for U.S. investors. Hopefully we can put those concerns to rest even if it does mean a recession for the rest of Europe. That's our outlook for the remainder of the year."
- Embargoed: 17th November 2011 12:00
- Keywords:
- Location: Usa, Usa
- Country: USA
- Topics: Economy
- Reuters ID: LVA1H7GPJQFNVP7C012W8CN6BGAZ
- Story Text: U.S. stocks tumbled on Tuesday (November 1) after investors were blindsided by a surprise call for a Greek referendum on an EU bailout plan, casting doubt on the sustainability of the recent market rally.
The S&P 500 has slid more than 5 percent so far this week in moves reminiscent of the stomach-churning market swings seen over the past two months and after investors thought the worst of the euro zone debt crisis was over.
The speedy pullback comes after stocks rebounded to post their best month in 20 years in October. The gains were fueled by hope for an eventual deal to rescue Greece, finally agreed upon at last week's European Union summit.
"It's not about the Greek economy. That economy is going to be in a recession, maybe even a depression for years to come," said Jeffrey Kleintop, chief market strategist for LPL Financial in Boston.
"It's more about the contagion of that into the banking sector and perhaps other U.S. financial securities that's raised the concern for U.S. investors. Hopefully we can put those concerns to rest even if it does mean a recession for the rest of Europe," added Kleintop.
Analysts said if Greek voters reject the unpopular bailout in a vote proposed by Greek Premier George Papandreou, it would likely result in a "hard default" by Greece, causing bigger losses for banks and raising the threat of systemic risk.
The news slammed European stocks, particularly the region's banks, which slumped 6 percent. U.S. banks were also hit hard. Morgan Stanley, which investors worry has heavy exposure to Europe, fell 8 percent to $16.23 (USD).
Indexes swung sharply as successive European lawmakers lined up behind the bailout package but returned to close near session lows after a Greek government spokesman said the prime minister told his cabinet the referendum would go ahead.
The Dow Jones industrial average fell 297.05 points, or 2.48 percent, at 11,657.96. The Standard & Poor's 500 Index lost 35.02 points, or 2.79 percent, at 1,218.28. The Nasdaq Composite Index dropped 77.45 points, or 2.89 percent, at 2,606.96.
The selloff came on sharp spike in volume with 10.3 billion shares traded on the NYSE, the Amex, and the Nasdaq, 22 percent above its 20-day moving average, while the CBOE volatility index jumped 16 percent to 34.77, its highest since around mid-October.
Nearly six stocks fell on the NYSE for every one that rose.
Adding to the gloom, factory activity in Asia's big export economies slowed to the weakest rate in nearly three years in October, while UK manufacturing suffered a sharp decline, reigniting fears of a global slowdown.
The S&P 500 traded below its 14-day moving average for the first time since Oct. 7, pointing to a possible shift in short-term momentum. The benchmark also broke through support at 1,220.
Economic data showed the pace of growth in the U.S. manufacturing sector slowed in October, though improvement in new orders suggested resiliency in the sector. - Copyright Holder: REUTERS
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