Post date: Jul 23, 2012 5:13:8 PM
There were also worrying signs from U.S. earnings. McDonald's Corp fell 2.3 percent to $89.45 USD after posting lower-than-expected profit. Its chief executive officer said the results "reflected the slowing global economy (and) persistent economic headwinds."
The Spanish region of Murcia looked set to follow Valencia in tapping a government program to keep its finances afloat, while local media reported half a dozen regions were ready to do likewise.
U.S. stocks drop at the open on Monday on fears that Spain seems closer to needing a sovereign
bailout.
NEW YORK CITY, NEW YORK, UNITED STATES (JULY 23, 2012) (NYSE) - Wall Street tracked a sharp selloff in global equity markets on Monday (July 23) as Spain appeared closer to needing a bailout and fears grew that Greece may be approaching an exit from the euro zone.
German magazine Der Spiegel cited high-ranking representatives in Brussels saying the IMF may not take part in any additional financing for Greece. Inspectors from the European Commission, European Central Bank and International Monetary Fund arrive in Athens on Tuesday (July 24).
Overseas stock and commodity markets fell steeply. European shares lost 2.6 percent, led by euro zone banking stocks, a trend the United States followed as shares of Morgan Stanley fell 2.3 percent to $12.50.
The Dow Jones industrial average dropped 211.42 points, or 1.65 percent, to 12,611.15. The Standard & Poor's 500 Index fell 20.92 points, or 1.54 percent, to 1,341.74. The Nasdaq Composite Index lost 63.47 points, or 2.17 percent, to 2,861.83.
Traders were also focused on a slowdown in the global economy. China's economic outlook was cut by Japan, its biggest Asian trading partner, Bloomberg reported.
The euro slid to a two-year low against the dollar and a near 12-year trough against the yen, pressured by fears that Spain may eventually need a full sovereign bailout.
Attention has again turned to the potential for Greece to exit the euro zone. Alexander Dobrindt, a leading German conservative was quoted on Monday saying Greece should start paying half of its pensions and state salaries in drachmas as part of a gradual exit from the euro zone.
The yield on the Spanish 10-year bond was last at 7.5 percent, well over what analysts consider a sustainable level.
Spain's IBEX stock index fell 2.4 percent, hitting its lowest level in nearly a decade. Italy's FTSE MIB fell nearly 4 percent and hit its lowest level in more than 3 years.