Stocks slide over Greek-debt concerns

Associated Press

NEW YORK

Pessimism about Greece’s financial problems returned to the financial markets Monday.

Stocks fell sharply as investors once again doubted that the country will be able to avoid a default on its debt.

Even after a late-day rally cut its losses by nearly half, the Dow Jones industrial average closed down 108.08, or 0.9 percent, at 11,401.01.

The drop ended five days of gains for stocks and marked the return of the back-and-forth trading that has accompanied the uncertainty about Europe’s debt crisis.

European finance ministers said Friday they would delay authorizing an $11 billion installment of emergency funds for Greece until October.

On Monday, the country’s finance minister had an emergency teleconference with its international creditors. They are pressuring the government on austerity measures to reduce Greece’s debt. Investors fear Greece won’t be able to convince lenders that it can pay its debts — and that it won’t get the money it needs to avoid a default on debts that must be paid next month.

Late Monday, Greece’s finance minister said that the 21/2-hour conference call was “productive and substantive.” Hope that Greece might be closer to qualifying for rescue funds started a late comeback. The Dow gained about 100 points in the last hour of trading.

But investors also appeared pessimistic about a Federal Reserve policy decision expected Wednesday. Some economists believe that since the Fed decided to have a two-day meeting instead of the originally planned one-day session, that it was preparing to take steps to stimulate the economy. However, other analysts doubt that the Fed will announce a new plan for the economy.

President Barack Obama on Monday called for $1.5 trillion in new taxes to reduce the U.S. deficit. He said, “We can’t just cut our way out of this hole.”