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European debt woes continue to plague Wall Street

07-25-2012 06:38 BJT

NEW YORK, July 24 (Xinhua) -- U.S. stocks slid for the third straight session on Tuesday as concerns over Europe and some weak earnings continued to weigh on the market.

When the market closed, the Dow Jones industrial average lost 104.14 points, or 0.82 percent, to 12,617.32. The Standard &Poor' s 500 was down 12.21 points, or 0.90 percent, to 1,338.31. The Nasdaq Composite Index declined 27.16 points, or 0.94 percent, to 2,862.99.

Worries over European debt woes and the continent's bleaker economic outlook continued to plague the market.

Late Monday, rating agency Moody's cut its credit outlook for Germany, the Netherlands and Luxembourg to negative from stable, warning that the three European countries could lose their Aaa ratings.

Moody's also anticipated that strong countries like Germany will have to shoulder a heavy financial burden as they support weaker countries like Spain and Italy. The rating agency also said there was an "increased likelihood" that Greece would leave Europe 's monetary union.

Adding to worries, data showed that manufacturing in Germany, the euro zone's biggest economy, contracted at its fastest pace in more than three years and its service sector also shrank. In France, factory activity fell at its fastest pace since May.

Meanwhile, the yield of Spain's government bonds continued to climb as investors worried about the country's solvency.

A separate report also showed that the euro zone's private sector shrank for the sixth month in July, raising fears that the region will fall back into recession.

Apart from all the bad news from Europe, earnings from some major U.S. companies came in weak on Tuesday, also dragging stocks lower,

United Parcel Service cut its earnings forecast by 4 percent for the year, citing global economic weakness and fear among its customers of a downturn. As the result, stocks of the package delivery company lost more than 4.62 percent to settle at 74.35 dollars a share.

Chemicals maker DuPont posted a 3 percent decline in net income for the second quarter on slower business in Europe and Asia.

However, major indexes erased half of their gains at late trading after a Wall Street Journal report said that the U.S. Federal Reserve was moving closer to more quantitative easing.

"Amid the recent wave of disappointing economic news, conversation inside the Fed has turned more intensely toward the questions of how and when to move. Central-bank officials could take new steps at their meeting next week, July 31 and Aug. 1, though they might wait until their September meeting to accumulate more information on the pace of growth and job gains before deciding whether to act," according to the report.

In other markets, the U.S. dollar rose against most major currencies in late New York trading on Tuesday, extending gains to two-year high as the concerns about the European debt crisis weighed on the euro.

Crude prices edged up after choppy trading on Tuesday. Light, sweet crude for August delivery rose 36 cents, or 0.41 percent, to settle at 88.50 dollars a barrel on the New York Mercantile Exchange.

 

Editor:Zhang Dan |Source: Xinhua

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