U.S. Stocks Decline on Concern Europe Crisis Is Worsening

U.S. stocks declined, following a two-week advance in the Standard & Poor’s 500 Index, amid concern Europe’s debt crisis is deepening and after a Chinese central-bank adviser said economic growth may slow further.

Morgan Stanley (MS) and Bank of America Corp. (BAC) dropped at least 1.5 percent, following a tumble in European lenders, as Spanish bond yields surged on expectations regional governments may ask for aid. Freeport-McMoRan (FCX) Copper & Gold Inc. slid 3.7 percent, pacing losses in commodity producers, amid concern about lower Chinese demand. McDonald’s Corp. (MCD), the world’s largest restaurant chain, fell 3.5 percent as profit trailed estimates.

The S&P 500 lost 1.8 percent to 1,338.22 at 9:46 a.m. New York time. The Dow Jones Industrial Average fell 234.24 points, or 1.8 percent, to 12,588.33. Trading in S&P 500 companies was up 36 percent from the 30-day average at this time of day.

“Nothing is really fixed in Europe,” said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York. His firm oversees $201 billion. “The Spanish situation is chronic. And it’s not just Spain. This isn’t over.”

Stocks joined a global slump before the arrival in Athens tomorrow of Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund. In Spain, Catalonia joined a list of regions that may tap aid from the central government. Spain’s 10-year yields surged above 7.5 percent for the first time.

Song Guoqing, an academic member of the People’s Bank of China monetary policy committee, predicted the nation’s expansion may cool to 7.4 percent this quarter. He also warned that a decline in producer prices in tandem with consumer inflation may hurt investment returns of industrial companies.

By Rita Nazareth
Read More: Bloomberg