Stocks recover amid Europe uncertainty
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NEW YORK (CNNMoney) — U.S. stocks recovered Monday afternoon from modest losses earlier in the day, as investors considered the implications of leadership changes in France and Greece.
The Dow Jones industrial average (INDU) finished down 30 points, or 0.2%, while the SP 500 (SPX) added less than half of a point and the Nasdaq (COMP) composite rose 1 point, or 0.1%. All three indexes started the day in the red, falling as much as 0.5%.
The swing from negative to positive territory mirrored the move in European markets. Stocks in France and Germany initially tumbled about 2% Monday, but bounced back as investors continued to digest the results. The DAX (DAX) in Germany finished up 1.8%, while France’s CAC 40 (CAC40) rose 0.1%. British markets were closed for a holiday.
“The good news is that markets are reacting in a very mature fashion,” Pimco Chief Executive Mohamed El-Erian told CNN International Monday. “The bad news is we have a lot of political uncertainty ahead of us still.”
In France’s presidential election, Socialist Francois Hollande defeated incumbent Nicolas Sarkozy, leaving investors worried about the future of austerity throughout Europe.
Unlike Sarkozy, Hollande advocates for more economic stimulus, but the extent to which Hollande will push his growth agenda remains to be seen. Still, his differing approach causes concern about how he might work with German Chancellor Angela Merkel, the key proponent of austerity.
“My belief is that this change in leadership won’t be as terrible as the market initially thought,” said Donald Selkin, chief market strategist at National Securities. “I don’t see how austerity is the answer for countries like Italy, Spain and Greece. To get them out of the mess they’re in, they need some economic stimulus.”
While Hollande was leading the polls ahead of the election, and investors expected his win, “change breeds nervousness,” said Anthony Conroy, head trader at ConvergEx Group.
In the Greek elections,
You can read the rest of this article at:: http://www.money.cnn.com/2012/05/07/markets/stocks/
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Posted by RobertButler
on May 7 2012. Filed under 2012 Presidential Campaign.
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