Stocks fall; Greek deal hope fades
Stocks dropped Wednesday, erasing all of the week’s earlier gains, as negotiations between Greece and its creditors seemed no closer to reaching a resolution.
The Dow Jones industrial average lost 178 points, or 1%, to 17,966.07. The Standard & Poor’s 500 index lost 15.62 points, or 0.7%, to 2,108.58 and the Nasdaq composite lost 37.68 points, or 0.7%, to 5,122.41.
Investors had been hopeful earlier in the week that the Greece problem was reaching the f inish line, but those hopes diminished as Wednesday wore on. European f inance ministers cut short a meeting on Greece’s proposals, citing major policy differences. They plan to meet again Thursday. Greek stocks fell 2%.
Prime Minister Alexis Tsipras criticized the International Monetary Fund as being needlessly picky about the reforms Greece had proposed.
Creditors are demanding, among other things, a freeze on pensions, scrapping some proposed taxes and surcharges on business, and higher sales tax on some goods.
Greece needs an agreement by June 30, when a key debt payment is due to the IMF. In a worst- case scenario, a Greek default could potentially lead to Greece abandoning the euro.
“Greece has to be the slowest- moving train wreck in f inancial history. But in a way it’s a good thing, because if Greece had failed in 2012 we’d be in a much more dire situation,” said Jack Ablin, chief investment officer at BMO Private Bank, which oversees $ 66 billion in Chicago.
Investors also remain focused on when the Federal Reserve might increase its key interest rate for the first time in nearly a decade. Fed Gov. Jerome Powell said Tuesday that he expects the U. S. central bank to begin raising its benchmark interest rate in September, with a second rate rise coming in December.
U. S. government bond prices rose. The yield on the 10- year Treasury note fell to 2.37% from 2.40% late Tuesday.
Among individual stocks, Sysco rose $ 1.16, or 3%, to $ 38.75 after a federal judge ruled that the food distribution company could not merge with rival US Foods. The Federal Trade Commission had sued to block the deal in February.
Lennar rose $ 2.06, or 4%, to $ 51.06 after the home builder reported results that beat analysts’ expectations. Other home builders such as Pulte, D. R. Horton and Toll Bros. also rose.
Benchmark U. S. crude fell 74 cents to close at $ 60.27 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U. S. refineries, fell 96 cents to close at $ 63.49 a barrel in London.