Wall St drops on euro debt, demand worries

By @ibtimes on

Stocks fell on Monday as escalating worries about the euro-zone debt crisis and a slowdown in global industrial demand led investors to sell risky assets.

Major indexes were down more than 1 percent, with the S&P 500 losing more than 3 percent for the month so far. Some analysts see a further decline in coming days to 1,300.

Industrial stocks were the biggest decliners. Alcoa Inc declined 1.8 percent to $15.98 and mining company Freeport-McMoRan Copper & Gold Inc fell 2.8 percent to $47.04.

There are some signs that suggest the market is oversold in the near term, but I see a significance built into this decline. I wouldn't be surprised to see S&P down to 1,300, 1,280 levels, James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania, said.

The Dow Jones industrial average <.DJI> was down 133.92 points, or 1.07 percent, at 12,378.12. The Standard & Poor's 500 Index <.SPX> was down 15.36 points, or 1.15 percent, at 1,317.91. The Nasdaq Composite Index <.IXIC> was down 46.98 points, or 1.68 percent, at 2,756.34.

S&P cut its rating outlook for Italy to negative from stable, citing weak growth prospects and increased risks from a mountain of debt.

The cut came on the heels of a downgrade of Greece's credit rating by Fitch Ratings on Friday.

Unlike before, I don't see the market brushing off the European issues this time because there are heightened concerns about the global industrial slowdown, said Dailey.

The dollar rose, denting commodity prices. U.S. crude oil futures lost 3.4 percent.

Chevron Corp dipped 1 percent to $101.52, while the PHLX oil service sector index <.OSX> shed 2.4 percent.

Greek Prime Minister George Papandreou discussed new emergency measures with his cabinet Monday to cut the deficit, keen to convince lenders the government can deal with a debt crisis without restructuring.

Adding to the worries, Spain's Socialists reeled from losses in local elections. Investors are concerned that voter rebellions against austerity plans could cause bailouts and budget agreements to unravel, leaving large amounts of debt in jeopardy of default.

The CBOE volatility index <.VIX> rose 6 percent to 18.47 after surging 10 percent to topping 20 on an intraday basis for the first time since March 23.

(Reporting by Angela Moon, Editing by Kenneth Barry)

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