- College algebra to be removed from Southeast required curriculum (10/10/17)1
- State declares test results for schools invalid (10/4/17)2
- Child-custody advocate: State law needs fix to provide parents with more equal custody (10/12/17)
- Cape Chinese restaurant purchases old Ponderosa property in Perryville (10/10/17)
- One of Cape's oldest mom-and-pop restaurants opens in new location (10/10/17)
- Past Rowdy the Redhawk mascot's identity revealed (10/15/17)
- Cancer will 'change your life, but it doesn't have to rule it' (10/8/17)
- Bills addressing equal child custody to be filed, legislators say (10/13/17)
- Ships to stay docked in Cape a week longer (10/10/17)
- Janet Koenig creates painted quilts to add flair to local barns (10/13/17)
Stocks slide; S&P 500 turns negative for '11
NEW YORK -- Stocks weakened Wednesday, ending a five-day advance in the S&P 500 index, as new signs of strain emerged in the European banking system. The euro fell to its lowest level against the dollar in nearly a year and Treasurys rallied.
The Dow Jones industrial average lost nearly 140 points. The S&P is now negative for the year again, after barely turning positive Friday.
The European Central Bank said banks had parked $590.72 billion with it overnight, surpassing the record set Monday. That means European banks were less willing to take the risk of making short-term loans to each other, opting instead to earn low interest rates from the ECB. The disclosure also hurt the euro, which fell to $1.291, its lowest level against the dollar since January.
The worrying news from the ECB overshadowed two successful auctions of Italian government debt. Italy was able to pay much lower borrowing rates than last month. The strong demand from investors raised hopes that Italy would be able to avoid sinking into a financial crisis, as smaller countries like Greece and Portugal have.
John Merrill, chief investment officer at Tanglewood Wealth Management, said markets would remain vulnerable to flare-ups in Europe's long-running financial crisis until leaders there come up with more convincing solutions for paying down their enormous debt loads and keeping the 17-nation currency union intact.
"We live in a Band-Aid world," Merrill said. "Nobody really is addressing underlying issues."
European leaders agreed at a summit Dec. 9 to forge closer fiscal ties over the long term, but investors are still worried that Greece might default on its debt or be forced to leave the euro bloc. A Greek exit from the currency union would likely cause huge disruptions for the country's economy and losses for European banks that hold Greek government debt. Investors fear that could cascade into another global financial panic, as happened in 2008 following the collapse of the U.S. investment bank Lehman Brothers.
The Dow Jones industrial average fell 139.94 points, or 1.1 percent, to 12,151.41. Materials and energy companies led the declines. Alcoa Inc. fell 3 percent and Caterpillar Inc. fell 2.4 percent.
With only two more trading days left in the year, markets were thinly populated in a holiday-shortened week. Shares traded on the New York Stock Exchange totaled 2.3 billion, less than half of the usual volume.
The S&P 500 fell 15.79 points, or 1.3 percent, to 1,249.64. The Nasdaq composite declined 35.22 points, or 1.3 percent, to 2,589.98.
The yield on the 10-year Treasury note fell to 1.93 percent from 2 percent late Tuesday as investors moved money into less risky assets.
The Bank of Italy raised $11.8 billion in two bond auctions, reflecting investor approval of the country's recently passed austerity measures. The yield on Italy's six-month bill offering was half the interest rate the country paid in a similar auction last month. The yield on the country's 10-year bond remained dangerously high, however, at 6.93 percent. It had risen to 7 percent Tuesday, a level that is considered unsustainable.
Italy is the euro zone's third-largest economy and is considered too big to save under the euro zone's current bailout funds. Investors have grown fearful over the past few months that Italy will find it difficult to pay off its massive debts, which stand at around $2.5 trillion.
The worries were reflected in U.S. bank stocks. Bank of America Corp. fell 3.5 percent, while Regions Financial Corp. fell 2.7 percent.
In other corporate news:
-- Sandridge Energy Inc. stock declined 4.4 percent on news that it is selling drilling rights in two states to a Spanish energy company, Repsol YPF.
-- Cavium Inc. fell over 1 percent, a day after the chipmaker said its fourth-quarter results will fall below its previous forecast.