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Ireland Bailout Over Euro Threatens US Stock Market

November 22, 2010

Stocks slip on concerns Euro crisis will spread
US stocks fall after Ireland's call for help stirs worries that more aid may needed in Europe

NEW YORK (AP) -- Stocks are down sharply in early trading as concerns grow that the European financial crisis will spread.

Ireland requested financial assistance Sunday from the European Union and International Monetary Fund.

It is the second time that the EU has come to the rescue of one of the 16 countries that use the euro. Traders worry that Portugal and Spain may also need bailouts in order to repay their debts, which would could cause the value of the euro to fall.

The Dow Jones industrial average is down 65, or 0.6 percent, to 11,139. The S&P 500 is down 7, or 0.6 percent, to 1,193. The Nasdaq composite index is down 11, or 0.5 percent, to 2,507.

THIS IS A BREAKING NEWS UPDATE.

NEW YORK (AP) -- U.S. stock futures slipped Monday as investors worried that Ireland's application for financial assistance from its neighbors may not be the last bailout needed in Europe.

After falling into a financial crisis brought on by mounting losses at three of its nationalized banks, Ireland formally requested help from its neighbors Sunday. The rescue package from the European Union and the International Monetary Fund will likely total $100 billion.

The request initially pushed stocks higher in Europe. But the Euro Stoxx 50, an index of blue chip companies in countries that use the euro, was down 0.7 percent in afternoon trading there.

This is the second time that the European Union has come to the rescue of one of its 16 members that use the euro. In May, the EU and the IMF committed $140 billion to Greece in order to prevent the country from defaulting on its debt. Euro zone members have been willing to prop up each other's finances in hopes of avoiding a financial crisis that could cause the value of the euro to plummet.

Ireland's request for assistance does not put an end to the questions facing the euro zone. Fellow members Spain and Portugal are also saddled with heavy debt burdens and investors fear that they may also need a financial lifeline, putting additional pressures on the budgets of EU members. The euro fell 0.6 percent against the dollar.

China's benchmark Shanghai composite index fell 0.2 percent. The dollar gained 0.2 percent against a basket of six currencies.

Stock futures in the United States were down. Dow Jones industrial average futures fell 32, or 0.3 percent, to 11,148. S&P 500 futures fell 3.7, or 0.3 percent, to 1,194.70. Nasdaq 100 futures fell 1.5, or 0.1 percent, to 2,132.

Investors will sort through a full plate of economic data this week but trading will be shortened by the Thanksgiving holiday on Thursday.

Reports set to be released Tuesday and Wednesday include October home sales, an update of consumer sentiment, and revisions to earlier estimates of the third-quarter gross domestic product.

Some economists expect that the latest reading on U.S. economic growth for the third quarter will be slightly higher that the previously estimated 2.0 percent increase.

A survey of business economists released Monday revealed that many think that the U.S. economy will continue to grow slowly in the face of high unemployment. The National Association of Business Economists survey found that respondents expect the U.S. economy will grow 2.7 percent this year. Previously, the group expected growth of 2.6 percent.

The group expects the economy to grow 2.6 percent in 2011. Growth at that pace will be unlikely to put a large dent in the unemployment rate, which currently stands at 9.6 percent.

Tyson Foods Inc. announced that it beat analyst estimates and earned $213 million, or 57 cents per share, during the last quarter. The meat producer lost $457 million, or $1.23 per share, a year ago. Shares of the company were up 3.0 percent in pre-market trading.

Computer giant Hewlett-Packard Co. will release its third quarter earnings report after the market closes. It will be Hewlett-Packard's first earnings report since former chief executive Mark Hurd resigned in August amid allegations of sexual harassment. He was replaced by chief financial officer Leo Apotheker.

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