Markets dragged lower by Italian election outcome
Dow has worst drop in more than 3 months
The Associated Press
Posted: Feb 25, 2013 5:13 PM ET
Last Updated: Feb 25, 2013 5:30 PM ET
North American markets fell Monday and U.S. stocks had their worst drop in more than three months as the prospect of political paralysis in Italy raised the specter of Europe's debt crisis flaring up again.
In Toronto, the S&P/TSX composite index came down from a 130-point jump to close down 50.76 points to 12,650.87.
In New York, the Dow Jones industrial average fell 216.40 points, or 1.6 per cent, to 13,784.17, its biggest drop since Nov. 7.
The Standard & Poor's 500 index fell 27.75 points, or 1.8 per cent, to 1,487.85, dropping below 1,500 for the first time in three weeks.
The Nasdaq composite dropped 45.57 points, or 1.4 per cent, to 3,116.25.
Stocks had rallied in the early going as exit polls showed that a center-left coalition in Italy that favored economic reforms in the euro region's third-largest economy was leading.
That gain evaporated after a later poll predicted that the elections could result in a stalemate in the country's legislature.
Market confidence 'imploded'
The losses accelerated in the late afternoon as partial official results showed an upstart protest campaign led by a comedian making stunning inroads.
"There was confidence in this election and obviously confidence imploded," said Ben Schwartz, a market strategist at Lightspeed Financial.
Investors dumped Italian government bonds, sending their yields higher, and erased most of an early rally in Italy's stock market. The yield on Italy's 10-year government bond shot up to 4.43 per cent from 4.12 percent early in the day, a sign that investors' confidence in Italy's government was dimming quickly.
The country's benchmark stock index, the FSTE MIB, rose 0.7 per cent, giving up an early gain of four per cent. Investors worry about the outcome of Italy's election because it could set off another crisis of confidence in the region's shared currency, the euro.
Financial markets in both Europe and the U.S. have swooned at the prospect of Italy or Spain being dragged into the region's government debt troubles, which have led to bailouts of Greece, Ireland and Portugal and severe disruptions in financial markets.
As stocks plunged, gauges of market sentiment indicated that investors were becoming more risk-averse and parking their money in defensive assets.
The yield on the 10-year Treasury note, which is widely considered an ultra-safe investment, fell sharply as investors plowed money into U.S. government bonds. The yield fell to 1.88 per cent from 1.96 per cent late Friday.
The VIX index, a measure of how volatile investors expect the stock market to be, surged 34 per cent to 19, the biggest one-day move since August 2011.With files from The Canadian Press
Top News Headlines
- 2 men jailed in Dominican wedding fight return to Canada
- Two Canadian men who were detained in the Dominican Republic for nearly three weeks after a post-wedding fight broke out at a resort have returned to Toronto, the latest step in a drama that the wife of one of the men said was "like a scene from the movies." more »
- Senators call for 'zero tolerance' on harassment in RCMP
- The RCMP should amend its code of conduct to explicitly define and prohibit harassment, a Senate committee is recommending in a newly tabled report. more »
- Are e-cigarettes safe to puff?
- As electronic or e-cigarettes grow in popularity, some health advocates want them to be regulated. more »
- Most groups don't want return of Trudeau speaking fees
- Most of the 17 charitable and other organizations that have paid speaking fees to Liberal Leader Justin Trudeau during his time as an MP say they aren't interested in having their fees returned, despite Trudeau's offer on the weekend to reimburse any organization unhappy with his services. more »
Latest Business Headlines
- Tim Hortons being circled by Wall Street hedge funds
- At least two groups of American hedge funds have bought large chunks of Tim Hortons shares recently, a sign the activist investors want to push the company to make major changes to its business, or possibly give up some control over the company. more »
- Chrysler agrees to recall 2.9 million Jeep SUVs in U.S., Canada
- Chrysler avoided a showdown with U.S. government safety regulators Tuesday, agreeing to recall 2.7 million older Jeep Grand Cherokee and Liberty SUVs in the U.S. and 256,000 in Canada that could be at risk of a fuel tank fire. more »
- Leaders downplay reports of stalled Canada-EU trade talks
- Both Prime Minister Stephen Harper and his British counterpart, David Cameron, downplayed signs of trouble in the Canada-EU trade negotiations Tuesday, even as the European Union's spokesman suggested Canada hasn't shown enough "pragmatism and flexibility" at the table. more »
- Business jets dominate Bombardier's $2B in sales at air show
- Business jets dominated the aircraft orders announced by Bombardier on Tuesday, the second day of the Paris Air Show, accounting for most of the nearly $2 billion US worth of business that the Montreal-based company has done at the show — if all options are exercised. more »
- Crowdfunding websites trying to cash in on crowded field
- Success stories make it seem like crowdfunding websites drop cash from the heavens on to any deserving idea. But regulators and big banks are now taking a closer look at the controversial new field, Dianne Buckner writes. more »
Lang & O'Leary Exchange
The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.
- Canadians in Dominican wedding fight freed from jail
- Huge ancient city at Angkor Wat revealed by lasers
- Montreal mayor resigns amid corruption charges
- TV chef Nigella Lawson's husband cautioned by police for assault
- Disabled woman's care before dying on bus still a mystery
- Student with bullied past, 'The Doorman,' graduates
- Parents of son 'brutally beaten' playing hockey want charges
- 'Standing man' inspires new, silent protests in Turkey
- G8 leaders agree to 7-point plan on Syria as summit wraps