Stock market plunges on bearish news; U.S. unemployment and Greece

By IBTimes Staff Reporter | February 04 2010 9:55 AM

U.S. stock markets fell in early trading on Thursday, tracking Asian and European markets as worries over European sovereign debt intensified and concerns arose after a disappointing U.S. unemployment claims report was released this morning.

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The S&P 500 Index is down 15.68 points, or 1.43 percent, to trade at 1,081.40 at 9:50 a.m. EST. The Dow Jones Industrial Average lost 121.90 points, or 1.19 percent, to trade at 10,148.65. The Japanese Nikkei 225 closed down 0.46 percent and German DAX is trading down 1.03 percent.

Unexpectedly high U.S. unemployment claims were reported this morning at 8:30 am. Claims were 480,000 for the week ending January 30, the highest in seven weeks. Claims were 8,000 more than last week and higher than the expected figure of 455,000, according to Bloomberg.

The Bank of England, as widely expected, left its benchmark interest rate unchanged. It also decided to pause its quantitative easing. The Monetary Policy Committee decided to pause its $317 billion bond-purchase program, although it reserved the right to resume it, should the economic recovery fall short of expectations. The European Central Bank also left interest rates unchanged this morning.

Although ECB President Jean-Claude Trichet said during a press conference today that he was confident that the Greek government can cut its deficit below the European Union's limit, the spread of credit default swaps on Portuguese, Greek, and Spanish government debt all widened today, according to BusinessWeek.

Notable firms to report earnings this morning include Sony (NYSE:SNE), Royal Dutch Shell (NYSE:RDS.A), and MasterCard (NYSE:MA).

Sony beat expectations as it reported its first profit in five quarters. Its American Depositary Shares are trading down 1.01 percent. Although MasterCard (NYSE:MA) reported increasing quarterly profits, it missed expectations and is trading down 6.87 percent.

Royal Dutch Shell missed expectations and its 2009 profits were down 70 percent from last year. It also announced it will cut 1,000 jobs. Its ADRs were down 3.28 percent.

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Correction: An article on early trading on the U.S. stock market written on on February 4, 2010, mistakenly posted certain questions asked to ECB President Jean Claude Trichet on January 14, 2010.

On January 14, 2010, Trichet stressed the importance of Greece taking appropriate bold and courageous measures to fix its problem, although he refused to discuss possible contingency plans should Greece default.

A comment he made during a press conference on February 4, 2010 is now included in the article.