Dow now at 11,047, down 157 points.
NEW YORK (AP) — U.S. stocks followed European markets sharply
lower Tuesday after Standard & Poor’s downgraded the debt of
Portugal and Greece. The rating agency’s move intensified
investors’ fears that Europe’s debt problems are spreading.
Investors have been on edge for months about Greece’s fiscal crisis
even as they’ve sent stocks higher. They have also been worried
that Portugal could be the next weak European economy to require
help. That has undermined confidence in Europe’s shared currency,
the euro.
The dollar climbed by more than 1 percent against the euro, hitting
its highest level in about a year.
Tuesday’s downgrades overshadowed the latest series of upbeat
earnings reports from U.S. companies.
A setback in the European economic recovery “sends a U.S. recovery
back and spreads to emerging markets,” said Eric Thorne, an
investment adviser at Bryn Mawr Trust Wealth Management in Bryn
Mawr, Pa.
The debt problems have the potential “to have devastating effects,”
Thorne said. Though Thorne noted he doesn’t yet predict a
worst-case scenario that would put a global recovery completely on
hold.
Greece agreed last week to tap a rescue package from the 15 other
countries that use the euro and the International Monetary Fund.
However, there are now worries that Greece won’t have access to the
money before it is forced to make a big debt repayment on May
19.
In midday trading, the Dow Jones industrial average fell 180.70, or
1.6 percent, to 11,024.33. The Standard & Poor’s 500 index fell
24.43, or 2 percent, to 1,187.62, while the Nasdaq composite index
dropped 45.40, or 2 percent, to 2,477.55.
Portugal’s main stock index dropped 5.4 percent, while Greece’s
plummeted 6 percent. Britain’s FTSE 100 fell 2.6 percent, Germany’s
DAX index dropped 2.7 percent, and France’s CAC-40 tumbled 2.8
percent.
