Greece Default Fears Shake Stock Markets
New York — Fear that Greece could default on its debt and abandon the euro rattled global financial markets Friday.
News that negotiations between Greece and its international lenders were making little progress sent European stock markets down sharply, and the selling spread across the Atlantic. By the close of U.S. trading Friday, stocks across industries were lower, with four of five stocks down. Investors shifted money into German government bonds, a perceived haven.
In the U.S., disappointing first-quarter financial results from several big companies fed the selling. After American Express reported revenue that fell short of expectations, investors drove down its stock more than 4 percent.
For all the turmoil in the markets, major U.S. stock indexes closed the day with relatively modest losses. At one point, the Dow Jones industrial average was down 357, heading for its worst day in six months. The Dow regained some of those losses toward the close of trading, ending down 279.47 to 17,826.30, a drop of 1.5 percent.
That was only the worst drop since March 25. The Dow has struggled since reaching a record high on March 2 and is now back where it started the year.
The Standard & Poor’s 500 index lost 23.81 points, or 1.1 percent, to 2,081.18. The Nasdaq composite fell 75.98 points, or 1.5 percent, to 4,931.81.
In corporate news, Honeywell International fell $2.22, or 2 percent, to $101.70 after reporting disappointing first-quarter results. The industrial conglomerate posted earnings per share that beat estimates, but its revenue fell short.
Advanced Micro Devices plunged 10 percent after reporting a larger loss than investors had expected after the market closed on Thursday. The chipmaker’s stock fell 29 cents to $2.58.
Investors have been bracing themselves for a disappointing earnings season. Companies in the S&P 500 are expected to report earnings per share fell 2.6 percent from a year earlier, according to S&P Capital IQ. That would be the first drop since 2009.
Worrisome news out of China also weighed on investors. After markets closed in Asia, Chinese financial regulators issued warnings about that country’s soaring stock market. Regulators said they will tighten rules on borrowing to buy stocks. They also plan to make it easier for investors to bet against the market there, The Wall Street Journal reported. Shanghai’s stock market has more than doubled in the last year. “People are thinking maybe the party is over in China,” said Doug Cote, chief market strategist for Voya Investment Management. “China recognizes that it could be creating a bubble, and now it wants to slow down. It’s trying to rein back risk.”
Germany’s DAX index dropped 2.6 percent. France’s CAC 40 shed 1.6 percent and Britain’s FTSE 100 fell 0.9 percent. Investors piled into German government debt, which is perceived as being among the safest investments denominated in euros.