Post by ComradeMr on Jul 18, 2011 17:44:33 GMT -5
NEW YORK (Reuters) - Stocks dropped on Monday as bank shares bore the brunt of investor frustration over governments' inability to solve debt crises in the United States and Europe.
With five days to go before President Barack Obama's deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats were crafting a fallback plan to avert a U.S. default.
The longer the debt ceiling debate remains unresolved, the bigger the risk for further declines in stocks and a spike in volatility. The CBOE Volatility index <.VIX> rose 7.8 percent on Monday after a gain of more than 20 percent last week.
Adding to pressure on financials, the euro zone's regulatory stress tests for banks were viewed as unrealistically soft, given the scope of the crisis.
"It's not a good environment for financials," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
"The market is really scared right now and it's a fragile economy that we have, so when you throw something like this in the cake, then you have investors sitting on the sidelines or selling."
Bank of America Corp hit a new 52-week low and ended down 2.8 percent to $9.72 while Citigroup Inc lost 1.7 percent to $37.74. Financials were the weakest S&P sector on Monday, losing 1.4 percent.
Source
With five days to go before President Barack Obama's deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats were crafting a fallback plan to avert a U.S. default.
The longer the debt ceiling debate remains unresolved, the bigger the risk for further declines in stocks and a spike in volatility. The CBOE Volatility index <.VIX> rose 7.8 percent on Monday after a gain of more than 20 percent last week.
Adding to pressure on financials, the euro zone's regulatory stress tests for banks were viewed as unrealistically soft, given the scope of the crisis.
"It's not a good environment for financials," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
"The market is really scared right now and it's a fragile economy that we have, so when you throw something like this in the cake, then you have investors sitting on the sidelines or selling."
Bank of America Corp hit a new 52-week low and ended down 2.8 percent to $9.72 while Citigroup Inc lost 1.7 percent to $37.74. Financials were the weakest S&P sector on Monday, losing 1.4 percent.
Source