Wednesday Stocks Slide, Europe Still the Problem

Dow at 10,396 this morning, down 114 points.

NEW YORK (AP) — Stocks resumed their slide Wednesday after investors looked past a rising euro to still unanswered questions about Europe’s debt crisis.
The Dow Jones industrial average fell about 125 points at midday.
Stocks initially stabilized Wednesday after the euro bounced off of a four-year low, but soon turned lower as worries grew about Germany’s move to ban certain kinds of short-selling. The sudden announcement late Tuesday from Germany’s financial regulator was seen in the markets as another example of disarray in Europe’s financial system.
U.S. stocks have been tracking the movement of the 16-nation currency for weeks. A sliding euro indicates waning confidence in Europe’s ability to contain a debt crisis in Greece, which unsettles stock investors.
“People are still just very concerned about what’s going on overseas,” said Sam Stovall, chief investment strategist in U.S. equity research at Standard & Poor’s.
Germany enacted the new short-selling rule in hopes of curtailing sudden swings in European debt markets, like the ones that crippled Greece’s ability to borrow money after the rates on its bonds shot higher earlier this year.
European leaders agreed last week to a nearly $1 trillion bailout program to help countries like Greece that face mounting debt problems. The deal was initially embraced by financial markets, but traders quickly became concerned that the austerity measures tied to the rescue package would upend a rebound.
In midday trading, the Dow fell 122.50, or 1.2 percent, to 10,388.52. The broader Standard & Poor’s 500 index fell 13.08, or 1.2 percent, to 1,107.72. The Nasdaq composite index fell 33.67, or 1.5 percent, to 2,283.59.
U.S. stocks fell Tuesday after the euro slumped. The drop came after Germany said it had banned “naked” short selling, which occurs when traders bet on a stock or investment that they don’t own. The ban covers European government bonds, credit default swaps and the shares of several financial companies.
The euro immediately retreated after the ban was announced, which dragged down U.S. markets. The announcement came after the close of European markets and brought concerns that officials were having trouble blunting the debt crisis and waves of selling in European markets.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note slipped to 3.34 percent from 3.35 percent late Tuesday. Bond yields have been falling in recent weeks as investors flock to safe investments.
U.S. investors haven’t been focusing on the U.S. economy but given the downbeat mood on Wall Street downbeat news drew some attention.
The Mortgage Bankers Association reported that the number of homeowners who missed at least one payment on their mortgage rose to a record in the first quarter. That signaled that foreclosures could rise and suggested that troubles in the U.S. housing sector are far from over.
Traders also focused on Washington. The Senate is scheduled to vote Wednesday to end debate on the biggest overhaul of financial regulation since the 1930s. The Senate could vote this week. The bill would then be reconciled with a House version.
The concern for some investors is that the new rules could hurt profits at financial companies.
About nine stocks fell for every one that rose on the New York Stock Exchange, where volume came to 665 million shares, compared with 517 million traded at the same point Tuesday.
The Russell 2000 index of smaller companies fell 13.16, or 1.9 percent, to 669.59.
Britain’s FTSE 100 dropped 2.7 percent, Germany’s DAX index fell 2.8 percent, and France’s CAC-40 dropped 2.9 percent. Japan’s Nikkei stock average fell 0.5 percent.

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