Stocks Inch Slightly Lower as Calm Returns to Market
Calm returned to the stock market Monday after a spasm of fearful selling last week. Major indexes fell modestly in morning trading.
The Dow Jones industrial average opened at its lowest level since December after a 275-point sell-off on Friday ignited by grim economic signals, especially a dismal report on the U.S. labor market.
U.S. stocks alternated between small gains and losses all morning. In Europe, bond investors appeared less concerned about the finances of some financially troubled countries. Bond yields fell for Italy and Spain, meaning that they appear less likely to default. Lower bond yields mean decreased borrowing costs for those debt-strapped nations.
The Dow fell 31 12,088 as of 11:30 a.m. EDT. The Standard & Poor’s 500 index fell five to 1,273. The Nasdaq composite index fell 6 to 2,741.
European stocks closed mixed. Asian shares had fallen sharply, extending Friday’s selling.
The price of the 10-year U.S. Treasury note fell, lifting its yield to 1.51 percent. The yield hit a record low of 1.44 percent on Friday as fears of a global slowdown increased demand for safe investments.
As the outlook for the U.S. economy darkens, Europe faces more acute threats. Spain’s banks are in shambles, and Cyprus appears close to joining the club of bailed-out countries that already includes Greece, Portugal and Ireland.
Voters in Greek elections this month might choose leaders who intend to reject Europe’s bailout money and harsh spending cuts. That could lead to Greece’s expulsion from the euro, potentially rattling financial markets.
Still, there were some signs of growing confidence that Europe can avoid a messy breakup. The euro rose a penny against the dollar, to $1.25. It fell last week to a nearly two-year low against but rose after the May jobs report renewed concerns about the U.S.
Among U.S. stocks making big moves, Chesapeake Energy rose 2 percent after the company said it would replace four board members. The second-biggest U.S. natural gas company is under pressure from activist shareholder Carl Icahn, who owns a 7.6 percent stake in Chesapeake.
Homebuilder Lennar fell 3 percent, following an 8 percent drop Friday. The stock has dropped 11 percent in two days after surging 38 percent in the first three months of the year.
Earlier Monday, Asian markets appeared rattled by Friday’s U.S. jobs report and signs of slower growth in China. The Shanghai Composite Index fell 2.7 percent, its biggest slide of 2012.
(Copyright 2012 by The Associated Press. All Rights Reserved.)