Wall St. falls as Grexit fears grow, volatility spikes

29 Jun 2015 | Author: | No comments yet »

Global stocks stumble as Greece debt woes escalate.

U.S. stocks extended their losses in heavy trading on Monday, adding to a global selloff, after a collapse in Greek bailout talks intensified fears that the country could be the first to exit the euro zone.

The crisis worsened after a Greek government official said the country would not pay a 1.6 billon euro loan installment due to the International Monetary Fund on Tuesday. All three major indexes fell more than 1 percent on the same day for the first time in more than a month as investors dropped riskier assets such as equities and commodities. “A week ago, it seemed very likely that we were close to having a resolution, and now all of a sudden we’re waking up to capital controls?” said Leo Grohowski, who oversees about $194 billion in client assets as chief investment officer at BNY Mellon Wealth Management in New York. “I’m not confident that today reflects all the bad news that could happen. Greece’s long-running debt crisis took a dangerous turn over the weekend after Greece’s Prime Minister, Alexis Tsipras, said his government will hold a referendum on proposals made by the country’s lenders. Photo: Getty Images/AFP New York: Global stock markets were falling Monday as concerns mount about potential fallout from Greece’s escalating debt woes. Daily cash withdrawals are capped at 60 euros ($67) per account. “Whenever you see any kind of bank line there is in the back of investors’ mind the thought: ‘What if it spreads?

A September interest rate hike is “very much in play” if the U.S. economy continues to strengthen, though the Federal Reserve could also wait until December to start tightening policy, New York Fed President William Dudley told the Financial Times in an interview. What if people panic?’ ” said Karyn Cavanaugh, senior market strategist at Voya Investment Management. “What’s going on in Europe, of course it’s going to roil markets in the short term.” But for US investor, she said, “the long-term impact is not that big of a deal.” The Standard & Poor’s 500 index was down 26 points, or 1.2 per cent, to 2,076 as of 12:23 pm Eastern.

EDT (1606 GMT) the Dow Jones industrial average was down 198.65 points, or 1.11 percent, at 17,748.03, the S&P 500 was down 23.56 points, or 1.12 percent, at 2,077.93 and the Nasdaq Composite was down 66.14 points, or 1.3 percent, at 5,014.37. Greece’s stock market was closed. “The initial market reaction is negative,” said Dan Greenhaus, chief strategist at the brokerage BTIG, in a note to clients. But Greenhaus thinks that this episode in the European debt crisis isn’t as dangerous as previous ones. “We do not think this is Armageddon for the global economy,” he said.

Seres Therapeutics’ shares fell 19 percent to $41.60 after an 86 percent rise in its market debut on Friday, making it the biggest loser on the Nasdaq. Vitae Pharmaceuticals shares fall 15.4 percent to $12.85 after company said its drug to treat type 2 diabetes in overweight patients did not meet its main goal in a mid-stage study testing it as an add-on therapy. Among individual stocks, Sysco said it scrapped a proposed $3.5 billion buyout of US Foods after the Federal Trade Commission blocked the deal to combine the two food-service companies. The FTC argued that the merger it would reduce competition by putting three-quarters of US market for restaurant suppliers under the control of one company.

Back then, the fear was that a financial crisis would spread from Greece to the rest of Europe “because these economies were very fragile,” Cavanaugh said.

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