Stocks fell Friday, erasing the weekly gain for the S&P 500, on growing concern over Greece’s debt crisis and speculation Congress won’t pass President Barack Obama’s $447 billion jobs plan to boost the economy.
The Dow Jones industrial average closed down -303.68 or -2.69%, at 10,992.10; the S&P 500 fell -31.67, or -2.67%, ending at 1,154.23; and the Nasdaq composite closed down -61.15, or -2.42%, at 2,467.99. All numbers are preliminary.
“We’re dealing with a confidence crisis,” Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4 billion, said in a telephone interview. “You look at the possibility of a Greek default. Investors are making a decision now that they don’t want to be long over the weekend. A lot of people think that Germany will pull out a rabbit from the hat and fix Greece. Germany is fighting its own issues. It cannot be the sugar daddy for all of Europe.”
Questions over Greece’s ability to meet the terms of its rescue package are dogging the nation as bondholders weigh whether to participate in a debt exchange that’s crucial to a second bailout. The nation is seeking preliminary responses from bond investors to the proposed swap. Greece has no plans to publish details of anticipated participation in its debt-swap program this week or next, said Petros Christodoulou, head of the country’s debt management office.
Greece is committed to “full implementation” of its bailout agreement, the country’s finance ministry said in a statement. The country rejected default talk as “organized speculation,” according to the statement.
In a sign officials are increasingly split over the best way to fight Europe’s debt crisis, Juergen Stark resigned from the European Central Bank’s executive board. Mr. Stark stepped down after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting.
Stocks also fell on speculation Congress won’t pass Mr. Obama’s plan to boost the economy. The president, speaking before a joint session of Congress Thursday, demanded six times that lawmakers act “right away” on a plan that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners.
“For people hoping for a quick injection of economic activity, that’s not what Obama’s plan portends,” Peter Sorrentino, a senior money manager at Huntington Asset Advisors in Cincinnati, said in a telephone interview. The firm oversees $14.8 billion. “There’s a perception that it’s going to be difficult to pass it. Some people are concerned that it might not have worked last time. So, why would this be any better?”