U.S. stocks fell to session lows Monday afternoon after signs that European financial ministers had failed to agree on new efforts to bolster the continent’s bailout efforts, adding to traders’ malaise over financial stocks earlier in the session.
The Dow Jones Industrial Average shed 100 points, or 0.9%, to 11765 in late-afternoon trading on Monday, after posting a slim advance early in the day. The Standard & Poor’s 500-stock index shed 14 points, or 1.2%, to 1205, and the Nasdaq Composite lost 32 points, or 1.2%, to 2524.
Stocks were down for most of the session but fell to session lows after Dow Jones Newswires reported that European Union financial ministers could not reach an agreement to raise a ceiling on funds for the region’s planned bailout efforts during a closely watched conference call on Monday. Around the same time, Bank of America fell below $5 for the first time since March 2009.
“The afternoon weakness can be attributed to the headlines on the EU’s failure to raise the debt ceiling [but] the headlines today have been very much negative,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management. “The broader market can only ignore the major money center banks trading down 3, 4 and 5 percent for so long before it becomes a factor.”
Earlier, a modest rally in stocks evaporated after European Central Bank President Mario Draghi made cautious comments on the state of Europe’s economy. the ECB’s Draghi said the region’s economic outlook was subject to “high uncertainty” and that substantial risks remained. He added that the central bank was trying “to do its best” to avoid a credit crunch stemming from the lack of funding banks are facing in the euro zone.
Trading volume was light as many investors were closing their books for the year. About 2.6 billion shares had changed hands in New York Stock Exchange composite volume as of 3:15 p.m. Eastern time. Average daily volume this year has been about 4.3 billion shares.
EasyForexNews Research Team