Dow tanks on Argentina debt default, other fears
USA TODAY-
Financial markets went into a tailspin Thursday after Argentina defaulted on its debt, raising fears among skittish investors already fretting over ...
Argentina slides into default as debt talks fail
In-Depth-Wall Street Journal-
Financial markets went into a tailspin Thursday after Argentina defaulted on its debt, raising fears among skittish investors already fretting over weak corporate earnings growth, rising interest rates and an aging bull market.
Argentina's blue chip Merval Index was among the biggest losers, sinking 7% — the equivalent of a 1,000-point drop in the Dow Jones Industrial Average.
The Dow sank 317.06 points to 16,563.30, a two-month low. The 1.9% drop is the blue chip barometer's third-biggest daily decline this year and the worst since a 267-point loss April 10. Selling intensified as selling momentum picked up in afternoon trading.
Broader averages were also hit hard. The Standard & Poor's 500 fell 2% to 1930.67, a six-week low. The Nasdaq lost 2.1% to 4369.77 and the Russell 2000 was off 2.1% to 1148.
With the losses, a five-month string of Dow and S&P 500 Index gains will end with July's last trading session.
European markets also fell sharply, with Germany's DAX index tumbling 1.9% to 9407.48, France's CAC 40 losing 1.5% to 4246.14 and Britain's FTSE index off 0.6% to 6730.11.
MARKETS: Argentina's stock index sinks 7% on default fears
DEFAULT: 5 things to know about Argentine debt crisis
The main catalyst was Argentina, which defaulted on some of its debt for a second time in 13 years.
In a bitter fight with U.S. hedge fund Elliott Management, a breakdown in talks between Argentina and U.S. creditors late Wednesday over a missed debt interest payment sent the country into default.
But global markets were under renewed pressure over economic growth and weakening corporate earnings and in Europe, the potential impact of harsher U.S. and European sanctions against Russia.
Quarterly corporate reports also roiled the broad market. Dow component ExxonMobil dropped nearly 3% to $100.20. The energy giant bested second-quarter expectations with a 28% gain in net income, but said oil and gas production fell 5.7% to its lowest levels since 2009.
Some investors believe Argentina's woes provided an excuse to sell stocks before a long-awaited correction causes more damage. The Dow has gone 33 months without a correction of at least 10%. Since World War II, there has been sell-offs of at least 10% once every 20 months.
Liz Ann Sonders, market strategist for Charles Schwab, told CNBC that Argentina's woes were not the chief reason for Thursday's down draft. Bullish sentiment has somewhat weakened due to weak European economies and fears that the Federal Reserve will hike interest rates sooner than some expected. Given the market's protracted gains, the stocks could be due for a correction, but in market is not overvalued, Sonders said.
WHAT TO WATCH: 6 Argentine stocks to keep an eye on
ARE YOU EXPOSED? : ETFs with the biggest bets on Argentina
Thursday's stock slide comes a day after the Commerce Department reported second-quarter growth rose at a seasonally adjusted 4% rate, exceeding consensus expectations. But that fueled renewed fears fof higher interest rates, which could clip stocks.
"Good news is getting to be bad news again," says Jack Ablin, chief investment officer at BMO Private Bank. "The GDP report is obviously good news, so why are stocks off? Because people are wondering when the party will come to an end."
One bright spot: crude oil prices continue to slide. Benchmark West Texas Intermediate slipped 2.2% to $98.04 a barrel. Brent crude eased 0.3% to $106.18.
Contributing: Associated Press
In-Depth-Wall Street Journal-
Financial markets went into a tailspin Thursday after Argentina defaulted on its debt, raising fears among skittish investors already fretting over weak corporate earnings growth, rising interest rates and an aging bull market.
Argentina's blue chip Merval Index was among the biggest losers, sinking 7% — the equivalent of a 1,000-point drop in the Dow Jones Industrial Average.
The Dow sank 317.06 points to 16,563.30, a two-month low. The 1.9% drop is the blue chip barometer's third-biggest daily decline this year and the worst since a 267-point loss April 10. Selling intensified as selling momentum picked up in afternoon trading.
Broader averages were also hit hard. The Standard & Poor's 500 fell 2% to 1930.67, a six-week low. The Nasdaq lost 2.1% to 4369.77 and the Russell 2000 was off 2.1% to 1148.
With the losses, a five-month string of Dow and S&P 500 Index gains will end with July's last trading session.
European markets also fell sharply, with Germany's DAX index tumbling 1.9% to 9407.48, France's CAC 40 losing 1.5% to 4246.14 and Britain's FTSE index off 0.6% to 6730.11.
MARKETS: Argentina's stock index sinks 7% on default fears
DEFAULT: 5 things to know about Argentine debt crisis
The main catalyst was Argentina, which defaulted on some of its debt for a second time in 13 years.
In a bitter fight with U.S. hedge fund Elliott Management, a breakdown in talks between Argentina and U.S. creditors late Wednesday over a missed debt interest payment sent the country into default.
But global markets were under renewed pressure over economic growth and weakening corporate earnings and in Europe, the potential impact of harsher U.S. and European sanctions against Russia.
Quarterly corporate reports also roiled the broad market. Dow component ExxonMobil dropped nearly 3% to $100.20. The energy giant bested second-quarter expectations with a 28% gain in net income, but said oil and gas production fell 5.7% to its lowest levels since 2009.
Some investors believe Argentina's woes provided an excuse to sell stocks before a long-awaited correction causes more damage. The Dow has gone 33 months without a correction of at least 10%. Since World War II, there has been sell-offs of at least 10% once every 20 months.
Liz Ann Sonders, market strategist for Charles Schwab, told CNBC that Argentina's woes were not the chief reason for Thursday's down draft. Bullish sentiment has somewhat weakened due to weak European economies and fears that the Federal Reserve will hike interest rates sooner than some expected. Given the market's protracted gains, the stocks could be due for a correction, but in market is not overvalued, Sonders said.
WHAT TO WATCH: 6 Argentine stocks to keep an eye on
ARE YOU EXPOSED? : ETFs with the biggest bets on Argentina
Thursday's stock slide comes a day after the Commerce Department reported second-quarter growth rose at a seasonally adjusted 4% rate, exceeding consensus expectations. But that fueled renewed fears fof higher interest rates, which could clip stocks.
"Good news is getting to be bad news again," says Jack Ablin, chief investment officer at BMO Private Bank. "The GDP report is obviously good news, so why are stocks off? Because people are wondering when the party will come to an end."
One bright spot: crude oil prices continue to slide. Benchmark West Texas Intermediate slipped 2.2% to $98.04 a barrel. Brent crude eased 0.3% to $106.18.
Contributing: Associated Press
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