Equities slip on fears of worsening EU debt crisis

Dow Jones:12,078.98 (–74.70) Nasdaq:2,657.22 (–12.05 ) S&P 500:1,251.80 (–7.75)

US STOCKS declined yesterday, snapping a two-day advance in the Standard and Poor’s 500 Index, as an increase in Italian borrowing costs deepened concern Europe will struggle to contain its sovereign debt crisis.

The Dow Jones Industrial Average decreased 74.70 points, or 0.6 per cent, to 12,078.98.

“These blip-ups in yields put more uncertainty in the market,” Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, said. “Just because they’ve had a bit of good news coming out of Europe last week, it doesn’t mean they don’t still have a lot of work to do to get their financial houses in order.”

Stocks fell as the yield on the Italian five-year bond rose following an auction and Spanish 10-year rates surged to a euro-era record above German yields.

The S&P 500 extended its decline after German finance minister Wolfgang Schäuble said Europe’s permanent bailout fund may not be implemented before 2013.

The equity index also dropped after German chancellor Angela Merkel’s Christian Democratic Union party voted to offer euro states a “voluntary” means of leaving the currency area.

Morgan Stanley fell 2.7 per cent to $15.92. Citigroup sank 3.2 per cent to $28.38.

US shares of Credit Suisse declined 3.4 per cent to $24.19. The Swiss bank may have its long-term credit rating cut by Moody’s Investors Service after the investment banking unit posted a loss and income at the wealth-management division fell.

Bank of America slid 2.6 per cent to $6.05.

Bank of New York Mellon fell 4.5 per cent to $20.55. The bank plans to save as much as $700 million before taxes by 2015, through operational improvements.

Boeing rallied 1.5 per cent, the most in the Dow, to $67.94. The company signed an agreement with Emirates at the Dubai Air show for 50 of its 777-300ER jets.

Lowe’s advanced 1.7 per cent to $23.50. The second-largest US home-improvement retailer reported third-quarter profit that exceeded analysts’ estimates.

Salesforce.com rose 2.8 per cent to $133.52.

International Business Mach-ines lost less than 0.1 per cent to $187.35, after rallying as much as 1.3 per cent. – (Bloomberg)