Wall Street slides as Greece worries intensify
NEW YORK (Reuters) - Investors dumped U.S. stocks on Tuesday as fears grew that the financial rescue package for Greece might not be enough to prevent a sovereign debt crisis from spreading to other weak euro zone countries.
Wall Street's major indexes slid more than 2 percent, echoing the wave of fear that gripped financial markets as investors fretted the crisis in Europe could derail the global economic recovery. European shares dropped 3 percent, while commodities sank and the euro hit a one-year low against the dollar.
Technology stocks, top gainers for the year, were pressured the most, with the PHLX semiconductor index down nearly 5 percent. In midday trading the Nasdaq was down 3 percent, on track for its worst day since early February.
"A lack of a firm tone in the euro is causing people to be nervous that this package is not going to solve the problem," said Nick Kalivas, senior equity index analyst at MF Global in Chicago, referring to the rescue package for Greece carved out over the weekend.
"The stock market's seen a tremendous run on very constructive news in an environment where rates are low, and it basically can't hold the highs," Kalivas said. "It's causing people to take profits and ring the register a bit."
Striking public workers in Greece challenged their government's agreement to implement austerity measures under a bailout deal with the European Union and the International Monetary Fund, heightening worried about Athens' ability to enforce deeper spending cuts.
The Dow Jones industrial average dropped 219.32 points, or 1.97 percent, to 10,932.51. The Standard & Poor's 500 Index lost 26.59 points, or 2.21 percent, to 1,175.67. The Nasdaq Composite Index shed 73.94 points, or 2.96 percent, to 2,424.80.
"It looks like we've got some profit-taking on early-cycle exporters, companies with a big global presence over in Europe," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
"I consider large-cap techs fairly significant exporters. We're taking profits out of technology, energy and industrials."
Energy shares led the S&P lower as crude oil futures fell more than $3 to $83.35 a barrel. Chevron was down 2.7 percent at $80.60 and the S&P energy index slid 2.3 percent.
Even so, the day's drop had not broken major support except for a short-term bottom at 1,181 on the S&P 500, the intraday low hit last week.
"For initial support most people are watching the 50-day moving average, which is at 1,168," said John Schlitz, chief U.S. market technician at Instinet in New York.
Encouraging U.S. economic data on manufacturing and housing failed to provide support. Reports showed new orders received by U.S. factories in March unexpectedly increased and pending home sales rose to a five-month high.
On the upside, better-than expected earnings from drug makers Merck & Co Inc and Pfizer Inc boosted those shares by more than 1 percent each.
(Additional reporting by Rodrigo Campos and Caroline Valetkevitch; Editing by Leslie Adler)