U.S. stocks slip on fiscal cliff woes; euro weakens

NEW YORK Wed Nov 14, 2012 4:07am IST

1 of 9. A trader checks screen data at the IG Index trading floor in London, December 9, 2011.

Credit: Reuters/Finbarr O'Reilly


Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

NEW YORK (Reuters) - World stocks fell on Tuesday, extending losses as U.S. stocks reversed gains on worries that the United States could fall back into recession due to looming spending cuts and tax rises if Congress does not act, and the euro weakened as Greece faced delays in winning more aid.

The euro hit a more than two-month low against the dollar and a one-month trough versus the yen on concern about the delays in aid for debt-burdened Greece and on uncertainty about whether Spain will seek a bailout.

Worries about Greece and Spain have caused the euro to lose value against the safe-haven dollar in seven of the last nine trading sessions. So far in November, the euro has fallen 1.9 percent against the dollar and 1.7 percent against the yen.

In late trading, the euro was slightly lower at $1.2704, after earlier trading as low as $1.2660, its lowest level since September 7.

Greece's international lenders gave the country more time to fix its budget, though they did not disburse the aid Greece had hoped to use to refinance 5 billion euros of its debt by Friday.

A public clash between Greece's international lenders over how Athens can bring its debts down to a sustainable level has fueled fears that Europe's troubles could flare up anew.

"When those overseeing resolution to the euro zone crisis continue to disagree, it becomes very difficult to instill confidence in investors," said Sean Cotton, foreign exchange adviser at Bank of the West in San Ramon, California.

On Wall Street, equities sold off late in the session, led by a slide in Microsoft, although retailers were a notable bright spot after Home Depot, the world's largest home improvement chain, raised its outlook.

"Stocks opened with a boost of upside energy, but when there was no follow-through by late morning, players just took some chips off the table to wait for tomorrow's retail sales figures and any developments in the fiscal cliff negotiations," said John Canavan, market analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.

The market is grappling with how a divided U.S. Congress will deal with the series of mandated tax hikes and spending cuts that start to take effect next year and could take the world's largest economy back into recession. However, serious negotiations are still weeks away, analysts said.

The Dow Jones industrial average .DJI was down 58.90 points, or 0.46 percent, at 12,756.18. The Standard & Poor's 500 Index .SPX was down 5.50 points, or 0.40 percent, at 1,374.53. The Nasdaq Composite Index .IXIC was down 20.37 points, or 0.70 percent, at 2,883.89.

The MSCI world equity index .MIWD00000PUS slipped 0.84 percent to 321.96.

The release of October U.S. retail sales on Wednesday is expected to offer key insights into how consumer spending is shaping up for the fourth quarter, said Deutsche Bank Securities chief U.S. economist Joseph LaVorgna.

Dow component Home Depot Inc (HD.N) raised its full-year outlook and cited an improving housing market as it reported quarterly results. Its stock rose 3.6 percent to finish at $63.38.

Microsoft (MSFT.O) shares fell 3.2 percent to $27.09 after the surprising departure of a key executive, who analysts said was the driving force behind the company's biggest product.

The risk aversion gripping investors boosted U.S. Treasuries, with the benchmark 10-year Treasury note up 6/32, and its yield easing to 1.59 percent.

A weak German ZEW sentiment survey heightened concerns about the impact of the euro zone crisis on Europe's largest economy and knocked the euro earlier in the session.

The FTSEurofirst 300 .FTEU3 pan-European index closed up 4.81 points, or 0.44 percent, at 1,099.16. Spain's IBEX index .IBEX rallied 1.7 percent, while its bond yields eased slightly <ES10YT=RR, amid speculation Spain might be close to asking for a sovereign bailout.

Brent crude oil LCOc1 slipped $0.89 to $108.18 a barrel, falling for a second day on worries about demand growth in a well-supplied market as the United States and Europe grapple with fragile economies.

Platinum group metals rose sharply after a forecast that production outages earlier this year could create a supply deficit, while gold traded flat as investors awaited more clarifications on Greek aid by the euro zone.

Spot gold eased 0.1 percent to $1,725.94 an ounce.

U.S. COMEX gold futures for December delivery settled down $6.10 at $1,724.80 an ounce, preliminary Reuters data showed.

(Additional reporting by Rodrigo Campos, Gertude Chavez-Dreyfuss and Frank Tang; Editing by Dan Grebler and Leslie Adler)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared


Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

DLF Shares

DLF Shares

DLF slides 3 percent, underperforms rivals.  Full Article 

Global Economy

Global Economy

Chinese factories stalling as euro zone business picks up  Full Article 

Rupee Falls

Rupee Falls

Rupee falls for third day; foreign fund inflows key.  Full Article 

Record High

Record High

BSE Sensex hits record high for third straight day.  Full Article 

M&M Upgraded

M&M Upgraded

Credit Suisse upgrades Mahindra & Mahindra to 'outperform'  Full Article 



Manchester United’s crisis has silver lining  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage