Tuesday Stocks Pull Back on Europe’s Deepening Debut Woes

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.

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