North American stocks remained weak in midday trading on Monday, amid an upbeat report on U.S. new home sales but dimming hopes for any bold action from European leaders at this week’s meeting to deal with the ongoing sovereign debt crisis.
At noon, the Dow Jones industrial average was down 176 points, or 1.4 per cent, to 12,465. The broader S&P 500 was down 26 points, or 1.9 per cent, to 1309. In Canada, the S&P/TSX composite index was down 134 points, or 1.2 per cent, to 11,301.
The moves follow reports that Germany has rejected using joint euro-area bonds as a potential solution to Europe’s debt crisis, dealing a blow to rising expectations that the country might be softening its opposition to such a move. Meanwhile, Cyprus has requested financial aid from the euro zone, citing a spillover effect from Greece and underlining the impression that efforts by European leaders to stem the crisis has had little impact so far.
European stocks were also down. Germany’s DAX index fell 2.1 per cent and the U.K.’s FTSE 100 fell 1.1 per cent. Spain’s benchmark index fell 3.7 per cent.
European government bonds also reflected rising anxieties, particularly among some of the more indebted countries. The yield on Spain’s 10-year government bond rose to 6.56 per cent, up about 30 basis points (there are 100 basis points in a percentage point). The yield on Italy’s 10-year government bond rose to about 6 per cent, up 21 basis points. Yields rise as bond prices fall.
Within North America, the losses were widespread. All 10 subindexes within the S&P 500 were in the red, led by economically sensitive areas. Energy stocks fell 2.6 per cent, financials fell 2.3 per cent and technology stocks fell 2.2 per cent. Defensive areas like utilities, consumer staples and telecom services held up better but were down nonetheless.
Within Canada’s benchmark index, energy stocks fell 2 per cent, financials fell 1.2 per cent and technology stocks fel 3 per cent. However, materials fell just 0.3 per cent after a modest rise in the price of gold lifted gold producers.
Among commodities, gold was recently spotted at $1,581 (U.S.) an ounce, up $9. Crude oil fell to $78.42 a barrel, down $1.34.