US stocks tumble on European crisis fears

US stocks tumble on European crisis fears

New York: US stocks slumped on new fears over Europe’s debt crisis, triggered by the rescue of a Spanish savings bank.

The Dow Jones Industrial Average lost 126.82 points (1.24%) to end at 10,066.57, extending last week’s massive losses when the blue-chip index shrank more than 4% and briefly fell below the sensitive 10,000-point level.

The tech-rich Nasdaq composite dipped 15.49 points (0.69%) to 2,213.55 while the broad-market Standard & Poor’s 500 declined 14.04 points (1.29%) to 1,073.65.

The market opened on a bearish note after the Spanish central bank’s weekend rescue of regional savings bank CajaSur, burdening Spain’s already strained public finances.

CajaSur’s rescue came as the Spanish government introduced a fresh round of austerity measures aimed at bringing the public deficit down to a eurozone limit of three percent of gross domestic product from 11.2% last year.

The bailout renewed eurozone debt concerns that have been dragging markets down in recent weeks.

It triggered “another round of concerns regarding the health of the financial system in that country in spite of the existence of the huge EU/IMF rescue plan," said Frederic Dickson, chief market strategist at D A Davidson & Co said.

“Investors will continue to follow the ongoing financial soap opera in Europe and the movement of the euro in response to changing investor expectations regarding how the sovereign debt situation plays out in Greece, Portugal, and Spain," he said.

Wall Street received a temporary boost on Monday when industry data showed a jump in US existing-home sales. It cut losses by midday but a late selloff on the European concerns pulled stocks down.

“A solid increase in existing-home sales helped repair some of the damage in late-morning trading, but sentiment seems to still be cautious amid the backdrop of the euro-area debt crisis, exacerbated by the weekend’s government bailout of a Spanish regional bank," analysts at Charles Schwab & Co said.

The National Association of Realtors (NAR) said sales of existing homes increased 7.6% to a seasonally adjusted annual rate of 5.77 million units in April, from an upwardly revised 5.36 million in March.