Stocks Hurt By Economic Worries in Europe
Stocks in the U.S. opened down on Monday, due to more worrying news from Europe. Reports from Europe said that sovereign debt continues to create problems for countries in the region even though austerity problems continuing huge budget cuts have been put into place. Stock markets in Europe were down sharply on the news.
By mid morning, the Dow had lost over 134 points in trading, with the concern focused on the euro zone stability as a whole. European Union statistics released on Monday confirmed the effects of the austerity plans that have been placed in many countries in the euro zone. Even though there have been widespread cost cutting measures throughout the region, the overall debt in the region increased to 87.2%, the highest it has been since the euro was first established.
In addition, the services and manufacturing sectors in the euro zone fell unexpectedly during April. Another cause for concern was the preliminary round of elections for the presidency of France. France’s incumbent president Nicholas Sarkozy placed second behind Socialist Francois Hollande, who is a stern critic of using austerity to solve a debt crisis. Sarkozy’s pact with Angela Markel of Germany has been key in the negotiations over the debt crisis in Europe.
The major indexes in Europe were sharply down. The CAC-40 in France dropped nearly 3%, while the main index in Germany was down almost 3.6%. The euro was also off versus the dollar. In the U.S., the S&P 500 index was down 16 points in morning trading and the NASDAQ was off 48 points to drop below 3,000.