Concerns about Greece’s ability to stave off bankruptcy hit stocks hard on Friday, shaking markets from a recent period of low volatility.
The Dow Jones industrial average closed at 12,801.23, down 89.23 points or 0.7 per cent. The broader S&P 500 closed at 1,342.64, down 9.31 points or 0.7 per cent. In Canada, the S&P/TSX composite index closed at 12,389.42, down 108.52 points or 0.9 per cent.
These indexes actually rebounded modestly from earlier lows, when they were on track to post their worst dips of 2012. Nonetheless, the declines contrasted with the tame moves seen throughout the week.
Blame the flight from risk on Europe, where euro zone members rejected Greece’s efforts to cut spending and Greek policy makers appeared unable to agree on more cuts as workers rioted. Without an agreement, Greece’s prime minister has warned that the country could face a catastrophe. With an agreement, some opposition members believe the country faces humiliation.
Meanwhile, the economic news from the United States wasn’t uplifting. A reading on consumer confidence from the University of Michigan showed a dip to 72.5 from 75, below economists’ expectations. Federal Reserve chairman Ben Bernanke said that the weak housing market has weighed on consumer spending, a trend that could continue for years.
The stock market declines were broad, affecting all but one stock within the 30-member Dow. Alcoa Inc. fell 3.3 per cent, DuPont fell 1.8 per cent and Bank of America Corp. fell 1.3 per cent. Home Depot Inc. rose 0.1 per cent.
Canadian stocks were held back by declining commodities. Crude oil fell to $98.67 (U.S.) a barrel, down $1.17. Gold fell to $1,725.30 an ounce, down $15.90. Canadian Oil Sands Ltd. fell 2.7 per cent, Suncor Energy Inc. fell 2.1 per cent and Barrick Gold Corp. fell 1.3 per cent.
Research In Motion Ltd. fell 2.5 per cent.
The moves in Europe were deeper: Germany’s DAX index fell 1.4 per cent and the Euro Stoxx 50 fell 1.7 per cent.