Dow sank 254 (near the lows), decliners over advancers 10-1 & NAZ fell 68. Bank stocks led the way lower, taking the Financial Index down 6 to 177 & well below its recent 190 highs.
The MLP & REIT Indices were each down about 5 & junk bonds were fractionally lower. Treasuries were in demand, taking the yield on the 10 year Treasury bond well below 2%. Oil & gold were also hit with selling.
Photo: Bloomberg
Pressure mounted on Greece's 2 main political parties to wrap up 3 days of critical power-sharing talks & name a new prime minister to take over. Attention has focused more on Rome than on Athens amid concerns that Italy's economy was heading the same way as Greece's. Greek officials defended the time it was taking for the new unity gov to be established. The big 2 political parties, the Socialist PASOK & the conservative New Democracy, are renowned for their opposition to each other & have rarely worked together since the rejection of the monarchy in 1974. Next, Papandreou will meet with Greece's president. Papandreou's office said the premier spoke by telephone with President Sarkozy & discussed "the developments in Europe and the eurozone," as well as the power-sharing negotiations in Athens. Papandreou informed the French president "of the imminent (formation) of a new gov in Greece supported by the majority and the opposition," Sarkozy's office said. The muddled mess drones on.
Photo: Bloomberg
Italy's key borrowing rate spiked well above the 7% level that eventually forced other eurozone countries to seek bailouts, amid uncertainty over who would lead the country when Premier Berlusconi steps down. Berlusconi said he would step aside for the good of the country once Parliament passes economic reforms & wouldn't run again for office. The yield on Italy's 10-year bonds surged to a high of 7.4%, up a whopping 82 basis points from the previous day. 7% is considered unsustainable for a gov over the longer-term. Greece, Ireland & Portugal had to ask for rescue loans once it became clear that their borrowing rates were stuck above that threshold. The key is how long the rate stays at that level. With debts around €1.9T ($2.6T), Italy is considered too big for Europe to bail out & has over €300B ($412B) to raise in 2012 alone. In the meantime, Berlusconi is not yet out & there is considerable uncertainty of what kind of gov will follow, contributing to market instability.
Italy’s Focus Shifts to Forming New Government
Photo: Yahoo
General Motors Q3 profit fell 15% from a year earlier as it posted a loss in Europe & said it would not be able meet its target of breaking even in Europe this year. EPS was $1.03, compared with $1.20 last year. It was the 7th-straight quarterly profit & beat lower numbers forecasted of 94¢. Revenue rose 7.6% to $36.7B, ahead of expectations of $35.9B. GM posted a pretax loss of $292M in Europe as the economy struggled. Its profit rose slightly in North America to $2.2B, but earnings at its intl operations, including China, fell 29% to $365M. CFO Dan Ammann said the company had a solid qtr but needs to improve its margin of profit in all regions. In Europe, the company is more than $1B ahead of last year's pretax earnings, but it still needs to take out costs across the board & put out the right products that people will buy. The company sold 2.2M vehicles in Q3, up 9% from a year earlier. The stock fell $2.22 in a very tough market.
Europe has had a series of sovereign debt problems but Italy is the most serious because it has the biggest debt & follows Scotch-Tape approaches to fix problems in other nations. Nobody knows here this will lead which sounds like a broken record here. Overall, Dow has held up remarkably well under the circumstances. But the Italian situation could be severe enough for that the bulls to give up. Dow is back below 12K, although that support line has not meant a lot so far in 2011.
The MLP & REIT Indices were each down about 5 & junk bonds were fractionally lower. Treasuries were in demand, taking the yield on the 10 year Treasury bond well below 2%. Oil & gold were also hit with selling.
ALERIAN MLP Index (^AMZ)
DJ REIT INDEXDJR (^DJR)
Treasury yields:
U.S. 3-month | 0.000% | |
U.S. 2-year | 0.230% | |
U.S. 10-year | 1.955% |
| CLZ11.NYM | ....Crude Oil Dec 11 | ...94.90 | ..... 1.90 | (2.0%) |
| GCX11.CMX | ...Gold Nov 11 | .....1,785.70 | ... 12.70 | (0.7%) |
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Pressure mounted on Greece's 2 main political parties to wrap up 3 days of critical power-sharing talks & name a new prime minister to take over. Attention has focused more on Rome than on Athens amid concerns that Italy's economy was heading the same way as Greece's. Greek officials defended the time it was taking for the new unity gov to be established. The big 2 political parties, the Socialist PASOK & the conservative New Democracy, are renowned for their opposition to each other & have rarely worked together since the rejection of the monarchy in 1974. Next, Papandreou will meet with Greece's president. Papandreou's office said the premier spoke by telephone with President Sarkozy & discussed "the developments in Europe and the eurozone," as well as the power-sharing negotiations in Athens. Papandreou informed the French president "of the imminent (formation) of a new gov in Greece supported by the majority and the opposition," Sarkozy's office said. The muddled mess drones on.
Italy's key borrowing rate spiked well above the 7% level that eventually forced other eurozone countries to seek bailouts, amid uncertainty over who would lead the country when Premier Berlusconi steps down. Berlusconi said he would step aside for the good of the country once Parliament passes economic reforms & wouldn't run again for office. The yield on Italy's 10-year bonds surged to a high of 7.4%, up a whopping 82 basis points from the previous day. 7% is considered unsustainable for a gov over the longer-term. Greece, Ireland & Portugal had to ask for rescue loans once it became clear that their borrowing rates were stuck above that threshold. The key is how long the rate stays at that level. With debts around €1.9T ($2.6T), Italy is considered too big for Europe to bail out & has over €300B ($412B) to raise in 2012 alone. In the meantime, Berlusconi is not yet out & there is considerable uncertainty of what kind of gov will follow, contributing to market instability.
Italy’s Focus Shifts to Forming New Government
General Motors Q3 profit fell 15% from a year earlier as it posted a loss in Europe & said it would not be able meet its target of breaking even in Europe this year. EPS was $1.03, compared with $1.20 last year. It was the 7th-straight quarterly profit & beat lower numbers forecasted of 94¢. Revenue rose 7.6% to $36.7B, ahead of expectations of $35.9B. GM posted a pretax loss of $292M in Europe as the economy struggled. Its profit rose slightly in North America to $2.2B, but earnings at its intl operations, including China, fell 29% to $365M. CFO Dan Ammann said the company had a solid qtr but needs to improve its margin of profit in all regions. In Europe, the company is more than $1B ahead of last year's pretax earnings, but it still needs to take out costs across the board & put out the right products that people will buy. The company sold 2.2M vehicles in Q3, up 9% from a year earlier. The stock fell $2.22 in a very tough market.
General Motors Company (GM)
Europe has had a series of sovereign debt problems but Italy is the most serious because it has the biggest debt & follows Scotch-Tape approaches to fix problems in other nations. Nobody knows here this will lead which sounds like a broken record here. Overall, Dow has held up remarkably well under the circumstances. But the Italian situation could be severe enough for that the bulls to give up. Dow is back below 12K, although that support line has not meant a lot so far in 2011.
Dow Industrials (INDU)
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