Stocks slide on Europe debt contagion fears

Dow Jones:12,505.76 (–151.44) Nasdaq:2,802.62 (–57.19) S&P 500:1,319.49 (–24.31)

US STOCKS slid yesterday, giving the Standard and Poor’s 500 Index its biggest two-day drop since March, as concern grew that Europe’s debt crisis will spread and American lawmakers failed to agree on cutting the deficit.

JPMorgan and Bank of America fell more than 3.1 per cent, driving financial shares in the SP 500 down the most since June 1st, as Italian and Spanish government bonds sank.

After the bell, Alcoa, often viewed as a bellwether of the US economy, posted a big jump in second-quarter profit partly due to soaring prices for aluminum and its raw material alumina. The Dow component’s stock rose 0.3 per cent to $15.96 in extended-hours trading.

Freeport McMoRan Copper Gold slid 3.3 per cent to $53.30.

News Corporation shares dropped 7.6 per cent to $15.48 on heavy volume as Britain looked for a way out of approving the company’s multibillion-dollar deal to buy broadcaster BSkyB amid a phone-hacking scandal.

The Dow Jones industrial average fell 151.44 points, or 1.20 per cent, at 12,505.76.

The Standard&Poor’s 500 Index was down 24.31 points, or 1.81 per cent, at 1,319.49.

The Nasdaq Composite Index lost 57.19 points, or 2 per cent, at 2,802.62.

“It’s a combination of a worsening of the debt crisis in Europe, and deficit and debt uncertainty in the US,” said Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina.

“The markets will remain under pressure until the debt crisis in Europe is perceived to be better contained,” he said.

Equities rebounded in July after the S&P 500 tumbled 3.2 per cent in May and June.

US president Barack Obama said yesterday that he will continue to press congressional leaders for “the largest possible deal” on a package of significant deficit cuts.

“Now is the time to deal with these issues,” Mr Obama said at a news conference before resuming talks yesterday afternoon with bipartisan congressional leaders toward a compromise on reducing deficits and raising the $14.3 trillion federal debt ceiling before the government exhausts its borrowing authority in August. – (Bloomberg/Reuters)