Wall St opens lower as Greek crisis deepens
WASHINGTON – Wall Street opened sharply lower on Monday as Greece came closer to a debt default after talks with its international creditors fell apart.
The Dow Industrial Average .DJI extended its losses from last week and was lower for the year, with all 30 Dow components in the red.
US stocks closed lower on Friday, as Greek debt talks stalled and as concern over how soon the US Federal Reserve might raise interest rates kept investors cautious.
Talks between Greece and its creditors broke up after less than an hour on Sunday, raising the prospect of Athens being unable to repay $1.8 billion owed to the International Monetary Fund by the end of this month.
“Between Greece and the Fed meeting, we are headed into a volatile week,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
“It does look like a technical default is in sight at the end of the month and the market could see a significant pullback.”
The Fed’s easy monetary policy has driven borrowing costs lower and helped stocks and bond prices to record highs in recent years.
The last time US stocks saw a 10 percent correction was in May 2011, according to RBC Capital Markets.
At 9:45am ET the Dow Jones industrial average .DJI was down 178.07 points, or 0.99 percent, at 17,720.77, the S&P 500 .SPX was down 18.23 points, or 0.87 percent, at 2,075.88 and the Nasdaq Composite .IXIC was down 50.35 points, or 1 percent, at 5,000.75.
All of the 10 major S&P 500 sectors were lower, with the technology index .SPLRCT leading the decline with a 1.1 percent drop.
Microsoft’s (MSFT.O) 1.4 percent fall weighed the most on the Nasdaq and the S&P while United Technologies’ (UTX.N) 2.5 percent drop was the biggest drag on the Dow.
Upbeat consumer sentiment and other data last week added to views the economy is regaining momentum, which increased anxiety over the timing of a rate raise ahead of this week’s Federal Open Market Committee meeting. The meeting on Tuesday and Wednesday is the central bank’s last before September.
Economists and top Wall Street banks expect the Fed to raise rates in September, in what could be the central bank’s first hike in almost a decade.
Data on Monday showed that manufacturing activity in New York State slowed in June, while US industrial production unexpectedly fell in May, mainly because of a strong dollar and a drop in spending by energy companies.
United Technologies (UTX.N) shares fell 2.5 percent to $114.70 after the company said it was exiting the helicopter business.
Dealertrack Technologies (TRAK.O) soared 57.7 percent to $62.83 after Cox Automotive agreed to buy the company in a deal valued at $4 billion.
RedHill Biopharma (RDHL.O) jumped 26.7 percent to $20.85 after it said its experimental drug met the main goal of eradicating a bacterial infection in a late-stage study.
Declining issues outnumbered advancers on the NYSE by 2,213 to 564. On the Nasdaq, 1,974 issues fell and 422 rose.
No stocks on the S&P 500 index hit a 52-week high while 11 hit 52-week low. The Nasdaq recorded 22 new highs and 27 new lows. –Reuters