Wall Street off on euro instability, recession fear
Wall Street edged lower on Monday as Italy and Greece rushed to form technocrat-led governments in a bid to stave off the euro zone's debt crisis, and as data showed the region is facing a looming recession.
The euro fell against the dollar as initial optimism about prospects of crisis-fighting reforms under new governments in Italy and Greece gave way to caution over the huge debt problems still plaguing the single currency zone.
Last week the markets chose to treat the glass as half full in interpreting the retirement of the regimes in Greece and Italy as positive, but it did nothing to cure the underlying issues, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Industrial production in the euro zone fell in September, the most since early 2009, supporting expectations of a sharp contraction of industry and a probable economic recession. Output at factories in the 17-nation bloc fell 2.0 percent for the month.
It is confirming directionally what investors hold as their belief, which is that Europe is either in or moving quickly toward what is likely recession, Luschini said.
Stocks have traded choppily and in tandem with the euro recently in a sign U.S. investors are taking cues from the euro zone's mushrooming debt crisis as bouts of risk aversion are followed by periods of relative optimism.
The Dow Jones industrial average fell 19.60 points, or 0.16 percent, at 12,134.08. The Standard & Poor's 500 Index lost 5.90 points, or 0.47 percent, at 1,257.95. The Nasdaq Composite Index fell 9.36 points, or 0.35 percent, at 2,669.39.
European shares fell after an auction of up to 3 billion euros ($4.1 billion) of five-year Italian bonds failed to provide relief to investors. The FTSEurofirst fell 0.7 percent.
Helping the Dow, Boeing Co shares rose after the U.S. planemaker announced an order worth at least $18 billion and said the Middle East will need to recruit and train tens of thousands of new pilots to sustain a massive expansion in long-haul fleets. The shares added 2.5 percent to $68.
(Editing by Padraic Cassidy)
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