- Title: USA: Concerns over Greek debt drive stocks sharply lower on Wall Street
- Date: 7th March 2012
- Summary: NEW YORK CITY, NEW YORK, UNITED STATES (MARCH 6, 2012) (REUTERS) (SOUNDBITE) (English) ALEC YOUNG, INTERNATIONAL EQUITY STRATEGIST, S&P CAPITAL IQ, SAYING: "A large percentage of the private sector bond holders of Greek debt, the private banks around the world and hedge funds that own Greek debt, have to go ahead with accepting a 50 percent haircut on the value of their Greek bonds and there is concern in the market you're not going see enough of the private players being willing to go along and that could scuttle the entire Greek bailout and I think that's really been a the heart of this violent sell-off that we had today on Wall Street."
- Embargoed: 22nd March 2012 12:00
- Keywords:
- Location: Usa, Usa
- Country: USA
- Topics: Economy
- Reuters ID: LVA9XYO5ESK8F5KE2PK6FJUW56KU
- Story Text: The Dow dropped more than 200 points on Tuesday (March 6), handing Wall Street its worst day in almost three months on renewed fears of a disorderly default in Greece and concerns that China's slowdown would hit global growth.
Analysts have expected a pullback for weeks, citing an overstretched market. Despite the day's decline, the S&P 500 is still up almost 7 percent for the year. If fourth-quarter gains are included, the benchmark index is still up almost 20 percent since Sept. 30.
Equities' recent rally has continued without a substantial pullback since December, supported in part by expectations that Europe's credit crisis would be contained and China's economy could avoid a hard landing.
The Dow Jones industrial average slid 203.66 points, or 1.57 percent, to 12,759.15 at the close. The Standard & Poor's 500 Index dropped 20.97 points, or 1.54 percent, to 1,343.36. The Nasdaq Composite Index fell 40.16 points, or 1.36 percent, to 2,910.32.
A group representing Greek bondholders warned a default could cause more than 1 trillion euros ($1.3 trillion) of damage to the region. Creditors have until Thursday night to accept a bond swap in which they would lose a substantial portion of the value of their bonds.
"A large percentage of the private sector bond holders of Greek debt, the private banks around the world and hedge funds that own Greek debt, have to go ahead with accepting a 50 percent haircut on the value of their Greek bonds and there is concern in the market you're not going see enough of the private players being willing to go along and that could scuttle the entire Greek bailout and I think that's really been a the heart of this violent sell-off that we had today on Wall Street," said Alec Young of S&P Capital IQ.
As part of a reassessment of possible collateral damage if the Greek deal with private debt holders collapses, traders sold the stocks of large banks on concern about their exposure to Greece.
The S&P financial sector index dropped 2.5 percent and the KBW bank index fell 2.7 percent. Morgan Stanley lost 5.3 percent to $17.32.
Greece has no plans to extend the deadline on its bond-swap offer to private creditors, officials said, dismissing market rumors that the date may be changed to increase participation in the offer.
Apple Inc shares fell, but outperformed the broader market after volatile swings in recent days. The stock closed down 0.5 percent at $530.26 (USD) on Tuesday.
Europe's downturn appeared ready to turn into a full-fledged recession due to a collapse in household spending, exports and manufacturing in the final months of 2011, the European Union said. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2012. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None
