Wednesday May 16, 2012

Europe’s latest political impasse cast a gloom over financial markets Tuesday. The euro plunged, and the Dow Jones industrial average extended a slide that has wiped out nearly 5 percent of its value in two weeks.

The biggest action of the day came shortly before U.S. markets opened, when a Greek party leader announced the talks to build a coalition government had failed. The euro and major European stock markets turned sharply lower and stayed there the rest of the day.

Newly elected political leaders in Greece disagree about whether to accept more international bailouts and continue with painful spending cuts. If Greece exits the euro currency, it could rattle financial markets around the world.

In the U.S., stocks opened mixed and then staged a weak, mid-morning rally after word that confidence among U.S. builders rose to a five-year high in May. Home builders gained: Hovnanian Enterprises surged 10 percent, Lennar Corp. 3 percent and PulteGroup Inc. 2 percent.

The Dow wound up with a loss of 63.35 points, or 0.5 percent, to close at 12,632. Losses by most of its components were offset by a big gain for JPMorgan Chase. The nation’s biggest bank rose 1.3 percent, recovering some of the losses it has sustained since revealing a $2 billion trading loss last week.

The Dow has lost 647 points, or 4.9 percent, since May 1, when it hit a four-year high of 13,279.32. It is on track for its first monthly decline since September, when it fell 6 percent.


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