the republic logo

US stocks fall after Greeks reject terms of latest bailout package; European markets slide

bug
Share/Save/Bookmark

NEW YORK — Stocks in the U.S. fell in afternoon trading Monday following sharper drops in Europe and Asia as Greeks overwhelmingly voted to reject terms of the country's latest bailout package.

U.S. government bond prices rose as investors sought safe places to park money. Oil drillers and other energy companies fell as the price of oil dropped 6 percent.

The market declines were not as bad as many had feared, something analysts are crediting to the resignation of the Greek finance minister, which might help bailout talks resume. The International Monetary Fund said on Monday that it will help the country if asked.

In Sunday's referendum on creditor proposals, 61 percent of Greeks voted "no," a much higher proportion than anticipated. Many in the markets fear that the decision has pushed Greece one step closer to leaving the euro. Greece's banks may soon run out of money and the country could be forced to issue its own currency.

A so-called "Grexit" from the euro is considered one of the biggest risks facing the global economy.

The Dow Jones industrial average fell 88 points, or 0.5 percent, to 17,641 as of 1:34 p.m. Eastern time. The Standard & Poor's 500 index gave up 11 points, or 0.5 percent, to 2,065. The Nasdaq composite fell 27 points, or 0.5 percent, to 4,982.

The U.S. market is coming off its sharpest weekly decline in three months.

In Europe, Germany's DAX fell 1.5 percent while the CAC-40 in France fell 2 percent. The FTSE 100 index of leading British shares was 0.8 percent lower.

, an economist at California State University, said that he expects a Greek exit to push up the value of the dollar as investors scramble for safety, making U.S. exports more expensive. He also thinks the European economy will slow.

"Our economic growth will be slower, and in Europe, whose economy is the most important for the U.S., growth will slow," he said.

But others are more optimistic.

Russ Koesterich, chief strategist at giant money manager BlackRock, wrote in note to clients that he doesn't think the Greece crisis poses a "longer-term" threat to the global economy or financial markets.

Oil prices took a big hit. The benchmark U.S. contract tumbled $3.64 to $53.30 a barrel in New York.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.31 percent from 2.39 percent late Thursday. U.S. markets were close Friday for Independence Day.

With Greek banks still shuttered and the European Central Bank under pressure to stop its emergency liquidity measures, Greece may not have long to secure a deal with creditors. A meeting of the eurozone's 19 leaders has been called for Tuesday.

Some hopes for progress in the talks grew Monday after Greek Finance Minister quit. His replacement may help unblock discussions with peers in the eurozone. Finance ministers also meet on Tuesday.

Over months of negotiations, Varoufakis' relations with his peers in the eurozone had deteriorated significantly.

"The fact that Varoufakis has resigned hints that the Greek government may at least be offering an olive branch given his reputation for using aggressive terms such as 'water-boarding' to describe the creditors' actions," said Jane Foley, a senior currency analyst at Rabobank International.

The euro fell 0.4 percent to $1.1084. The dollar slipped 0.1 percent to 122.44 Japanese yen.

The eurozone has taken steps after after years of trouble with Greece to limit damage from a default and euro exit. Banks in Europe no longer hold many Greek government bonds and the European Central Bank has pledged to pump liquidity into its financial system should fear spread through Europe.

Still, investors are on edge.

When the Greek government announced June 29 plans to hold a referendum and the closure of the country's banks, markets plunged around the world. In the U.S., the S&P 500 fell 2.1 percent, its biggest drop since the start of the year.

On Monday, investors braced for a repeat as Asian markets opened sharply lower. By the end of their trading days, Japan's Nikkei 225 and South Korea's Kospi each dropped more than 2 percent. Hong Kong's Hang Seng sank 3.2 percent.

But China bucked the trend. China's benchmark index, the Shanghai Composite climbed 2.4 percent after regulators and the securities industry intervened to prop up prices that had been falling in recent weeks.

Among U.S. stocks making big moves, Aetna sank $9.3to $116.28, a 7 percent loss. That was the biggest slide in the S&P 500. The company agreed last week to buy rival health insurer Humana for $35 billion. Humana rose $4.74, or 2.6 percent, $192.24

In economic news, U.S. service firms grew at a slightly faster pace in June, as business activity and new orders increased. The Institute for Supply Management said its services index edged up to 56 in June from 55.7 in May. Any reading over 50 indicates that services firms are expanding.


AP Writer Pan Pylas contributed to this report from London.

PHOTO: A television monitor carries news of the "No" vote on the Greek debt referendum as a trader works on the floor of the New York Stock Exchange, Monday, July 6, 2015, in New York. U.S. stocks are opening lower after Greeks voted overwhelmingly to reject the terms of the country's latest bailout. (AP Photo/Mark Lennihan)
A television monitor carries news of the "No" vote on the Greek debt referendum as a trader works on the floor of the New York Stock Exchange, Monday, July 6, 2015, in New York. U.S. stocks are opening lower after Greeks voted overwhelmingly to reject the terms of the country's latest bailout. (AP Photo/Mark Lennihan)

Think your friends should see this? Share it with them!

Story copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


Photo Gallery:
PHOTO: A trader works at the New York Stock Exchange, Monday, July 6, 2015, in New York. World markets are trending downward following Greece's "no" vote in Sunday's debt referendum. (AP Photo/Mark Lennihan)
Click to view (4 Photos)

All content copyright ©2015 The Republic, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.