Nov. 1, 2011, 5:20 p.m. EDT
U.S. stocks rattled by Greek bailout move
Drop follows S&P 500’s best October performance since 1974
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By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks fell hard for a second day Tuesday on heightened uncertainty over whether Greece would derail European efforts to curb the region’s sovereign debt.
Greek bailout referendum: analysis
The high stakes gamble by the Greek PM is unlikely to pay off says Costas Paris, senior correspondent for Dow Jones. “This is the reason why we have less and less participation by retail investors in this market; we don’t know if we’re going to open up 300 points or down 200 points, that’s too much stress for the average person, who doesn’t understand why Greece’s debt makes a difference for them,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
The Dow Jones Industrial Average /quotes/zigman/627449/delayed DJIA -0.51% ended down 297.05 points, or 2.5%, to 11,657.96, led by roughly 6% drops in Bank of America Corp. /quotes/zigman/190927/quotes/nls/bac BAC -6.08% and J.P. Morgan Chase /quotes/zigman/272085/quotes/nls/jpm JPM -1.19% shares. Among the Dow’s 30 components, only Pfizer Inc. /quotes/zigman/238207/quotes/nls/pfe PFE -1.11% ended higher, up 0.4%.
The S&P 500 Index /quotes/zigman/3870025 SPX -0.63% ended down 35.02 points, or 2.8%, to 1,218.28. A 4.7% drop in financial stocks led declines for all 10 industry sectors.
The Nasdaq Composite /quotes/zigman/123127 COMP -0.44% dropped 77.45 points, or 2.9%, to 2,606.96.
It was the second day of more-than 2% losses for the S&P 500 and Dow. The fierce two-day drop sent the S&P 500 and Nasdaq back into negative territory for 2011, while the Dow clung to a 0.7% year-to-date gain.
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Are you overlooking small-cap plays? Investors are turning to large-cap stocks for safety and dividends. But they may be missing small-cap opportunities. Jonathan Burton reports.
• How to trade the new Greek crisis
• A stock market versus a market of stocks
• A beginner’s guide to hedging
SAVING FOR RETIREMENT
• Our financial smarts erode quickly after age 60
• Quiz: Your money and investing smarts
• MarketWatch readers score top marks on quiz
• How to invest so your money lasts in retirement
THE TELL: MARKETS NEWS AND ANALYSIS
• Why 'buy and hold' is timely advice (The Tell)
• Corporate bonds worth a new look (The Tell)
• Some people are born spenders (The Tell)
For each stock rising five fell on the New York Stock Exchange, where 1.3 billion shares traded. NYSE composite volume topped 5.7 billion.
The stunning decision by Greece to call a referendum on its bailout — a request made by Prime Minister George Papandreou late in Monday’s U.S. stock session — reinserted a large dose of uncertainty into global markets and comes ahead of the two-day Group of 20 summit in France later this week. Read more on Greek referendum plans.
“The market hates uncertainty. There was never going to be one solution, what we needed was a plan. The fact that we had a fund set up to deal with the first failure was a huge step in the right direction,” said Pado of the strategy agreed to last week by European leaders.
Equities had come off session lows after Dow Jones Newswires quoted a Greek Socialist Party official in calling the referendum proposed by the country’s prime minister as “basically dead.”
Late in the session, the European Commission and the European Council released a statement urging Greece to accept the bailout, which would lower Greece’s debt level to 120% of gross domestic product by 2020 and establish a new program of loans for the country. Read more on Europe debt plan.
Should Greek voters reject the nation’s latest rescue package, it could lead to a disorderly default in Greece and bank failures across Europe, Cantor’s Pado and other analysts said.
The spike in Italian bond yields “now make it more costly to somehow rescue Italy, as Italy and France hold way too much Greek debt. It turned from an organized voluntary partial default to a potential completely disorganized 100% wipe-out for all those banks,” he said.
“It throws a wrench into the confidence the European Union might have in Papandreou and the Greek government to accept a deal when done,” Pado added.
Retreat after October rally
The slide had November off to a poor start following one of the best Octobers on record, with the S&P 500 tallying an 11% rise last month, its best October performance in 37 years, countering what is often a dismal month for equities.
“October is the scare month, it’s the month of crashes. I’ve lived through some of them, not ‘29, but the ‘87 one,” said Howard Silverblatt, senior index analyst at S&P Indices.
Weighing on commodities prices Tuesday, an index of Chinese manufacturing declined to its lowest level since February 2009. The China Federation of Logistics and Purchasing’s gauge fell to 50.4 in October from 51.2 the prior month. Read more on China manufacturing index.
The market offered little reaction to a gauge of U.S. manufacturing in October, which fell to 50.8% from 51.6% in September. Read more on ISM.
Add DJIA to portfolio /quotes/zigman/190927/quotes/nls/bac 
$ 6.49
-0.42 -6.08%
Volume: 261.22M
Nov. 4, 2011 4:00p
/quotes/zigman/272085/quotes/nls/jpm
/quotes/zigman/238207/quotes/nls/pfe
/quotes/zigman/123127
2,686.15
-11.82 -0.44%
Volume: 0.00
Nov. 4, 2011 5:30p
Kate Gibson is a reporter for MarketWatch, based in New York.
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DrKarlMarx 3 days ago
realitycheck2010 3 days ago
A huge rally topped off with MF Global going bankrupt. Other banks with PIIGS exposure showing signs of contagion and it's getting harder to hide.
TerryC. 3 days ago
realitycheck2010 3 days ago
Lauteurcalme 3 days ago
Only the incredibly naive would believe this coming from deceptive politicians and global bankers!
pyramidscheme 3 days ago
beentheredonthat 3 days ago
The only thing that really concerns me is what kind of effect all this will have on the holiday shopping season. Could dampen any Xmas rally. Just another thing to keep in mind. Remember not to get too over exuberant if Europe ever does come up with a real, honest to goodness, kick the can down the road solution this time.
polo007 3 days ago
EU Leaders Hold Pre-G-20 Crisis Talks
By Rebecca Christie and Simon Kennedy
Nov 1, 2011 11:12 PM ET .
.
European leaders racing to prevent their week-old debt crisis strategy from unravelling convene emergency talks today to tell Greece there is no alternative to the budget cuts imposed in the bailout plan.
Greek Prime Minister George Papandreou, his hold on power weakening, was summoned to Cannes on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the “only way to resolve Greek debt problems” is through a deal hammered out last week in a six-day crisis-management marathon.
Papandreou ... triggered the latest upheaval in the two-year- long crisis by abruptly announcing on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact. Global stocks, the euro and bonds of debt-strapped countries tumbled yesterday as concern of a disorderly Greek default mounted. more
polo007 3 days ago
Greek Prime Minister George Papandreou said a referendum on Europe’s rescue package will confirm the nation’s membership of the euro as he stuck to plans to hold the vote amid signs his government may collapse.
“The referendum will be a clear mandate and strong message within and outside Greece on our European course and our participation in the euro,” Papandreou told his ministers in Athens early today, according to an e-mailed transcript. It will “ensure this course in the most decisive way.” The cabinet voted unanimously to endorse the plan.
Papandreou will fly to France today to face European leaders surprised by his decision to put the bailout plan to a national vote and ... call a confidence vote in parliament. His grip on power weakened after a lawmaker from his socialist Pasok party defected, leaving him with 152 deputies in the 300-seat chamber, while another, Vasso Papandreou, called for the formation of a national unity government. more
TerryC. 3 days ago
http://www.youtube.com/watch?v=X4g9LEhCMF8&feature=related
http://www.youtube.com/watch?v=WWgtzwqWh60
CowardlyMouse 3 days ago
polo007 3 days ago
Sarkozy said a hastily arranged meeting for Wednesday in the Riviera resort of Cannes with his German counterpart Angela Merkel, Greek Prime Minister George Papandreou, European Union and IMF officials would "examine the conditions under which the commitments made could be maintained."
Sarkozy, Merkel, Eurogroup President Jean-Claude Juncker, European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, IMF chief Christine Lagarde and an ECB representative will meet first. They will then meet Papandreou and his finance minister.
The meeting comes just before a Nov 3-4 gathering of G20 heads of states in Cannes and will attempt to ... reassure world powers that the eurozone can resolve its crisis.
After an earlier call with Merkel, Sarkozy's office said the two countries were "determined" to ensure the full implementation of the Oct. 27 deal in the quickest time frame. more