Little change in erratic stock session
Associated Press
NEW YORK
Stocks ended an erratic session little changed Monday after investors spent the day tracking the euro’s moves against the dollar.
A drop and subsequent rebound in the euro steered the Dow Jones industrial average from a loss of 184 points at midday to a gain of about 6 points by the close. But three stocks fell for every two that rose on the New York Stock Exchange.
Investors are looking at the euro as an indicator of confidence levels in the European economies. The 16-nation currency has been sliding on concerns that debt problems will undermine Europe’s recovery, and in turn that of the U.S.
Stocks and other assets seen as risky have been hit hard at times in recent weeks because traders have so many unanswered questions about how Europe will pull itself from its financial mess without hurting its recovery. Because economies around the world are dependent on one another, the broader concern is that Europe’s problems will halt a rebound elsewhere.
The euro fell to a four-year low of $1.2237 against the dollar before moving higher. The ICE Futures US dollar index, which measures the dollar against a basket of six currencies, rose 0.1 percent.
Oil traded below $70 a barrel for the first time since February but finished above that psychological benchmark. Oil is priced in dollars, so a stronger dollar deters investment in oil. Crude oil fell $1.45 to $70.16 per barrel on the New York Mercantile Exchange.
Energy stocks, which make up about 10 percent of the S&P 500 index, dropped after oil fell. Shares of consumer staples companies, which are seen as safer bets in weak economies, rose.
Peabody Energy Corp. fell 5.3 percent. Procter & Gamble Co., which makes Tide detergent and Gillette razors, rose 1.3 percent.
Investors are questioning whether steep budget cuts in countries including Greece, Spain and Portugal will hinder an economic recovery in Europe and in turn, the U.S. Traders also are concerned that loan defaults could ripple through to banks in stronger countries like Germany and France. The fear is that the world banking system could see a replay of the losses that hobbled financial institutions in late 2008.
The austerity measures are required under a nearly $1 trillion bailout program the European Union and International Monetary Fund agreed to last week. The rescue package provides access to cheap loans for European countries facing mounting debt problems.
Traders are betting that U.S. export growth will continue to slow as Europeans, unnerved by problems at home, show less of an appetite to buy American goods. And if Americans get nervous and spend less on imports, that could further curtail the global recovery.
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