Stocks drop after Greece setback
A setback in talks between Greece and its creditors helped knock the stock market lower Friday amid renewed concerns that the country could default on its debts.
Despite the drop, the Standard & Poor’s 500 index managed to eke out a 1-point gain for the week, snapping a two-week slump.
An unexpected decision by the International Monetary Fund to walk away from talks with Greece spurred the selling. At a summit meeting in Brussels late Thursday, the IMF pulled its negotiators out of talks with Greece, saying there had been no progress and that major differences remained on key issues.
Without a deal by the end of the month, Greece faces the prospect of filing for bankruptcy and dropping the euro currency.
Markets are likely to make sudden turns until Greece and its creditors reach a deal, said Ninh Chung, head of investment strategy at SVB Asset Management.
Earlier this week, stocks on both sides of the Atlantic rallied on reports of progress in the talks.
“There had been optimism over Greece,” Chung said, “and now it seems like we’ve had a complete 180.”
The S&P 500 slipped 14.75 points, or 0.7%, to close at 2,094.11. The Dow Jones industrial average fell 140.53 points, or 0.8%, to 17,898.84 and the Nasdaq composite lost 31.41 points, or 0.6%, to 5,051.10.
The losses were modest but broad: All 30 companies in the Dow and all 10 industries in the S&P 500 finished with losses.
Major indexes in Europe slumped, wiping out gains from earlier in the week. Greece’s market fell the most, with the main Athens index down 6%. Germany’s DAX sank 1.2% and the CAC-40 in France finished with a loss of 1.4%. Britain’s FTSE 100 lost 1%.
In Asia, Japan’s Nikkei 225 inched up 0.1%. In China, the Shanghai composite index advanced 0.9% and Hong Kong’s Hang Seng rose 1.4%.
Government bond prices wavered, finishing the day slightly lower. The yield on the10-year Treasury inched up to 2.39% from 2.38% on Thursday.
In metals trading, gold fell $1.20 to settle at $1,179.20 an ounce.
Oil fell for a second straight day after reaching a high for the year Wednesday. Benchmark crude oil sank 81 cents to settle at $59.96 a barrel.
In other trading on the New York Mercantile Exchange, wholesale gasoline fell 1.7 cents to $2.121 a gallon and natural gas dropped 7.5 cents to $2.75 per 1,000 cubic feet.