Wall Street sinks on euro-zone bank troubles

By Chuck Mikolajczak

NEW YORK (BestGrowthStock) – Stocks slid on Monday, driving the Dow to its lowest level since February 10 as fresh signs of Europe’s banking problems emerged.

The euro zone’s turbulence kept investors wary of taking on risk, after the S&P 500’s 4.2 percent drop last week.

Financial shares were among the day’s largest decliners, with the KBW Bank index (.BKX: ) falling 3.3 percent. Wells Fargo (WFC.N: ) fell 4.7 percent to $28.71 after Goldman Sachs cut its rating on the stock to “neutral” from “buy.”

Concerns about Europe’s banking system continued to weigh on markets, after the Bank of Spain took over a small savings bank, CajaSur, over the weekend, increasing anxiety among investors worried about debt problems spreading throughout financial markets.

“What happens specifically to Greece doesn’t matter a whole lot, but if you start spreading to larger countries like Spain, then it becomes an issue. That is what is causing all this right now,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

The Dow Jones industrial average (.DJI: ) dropped 126.82 points, or 1.24 percent, to 10,066.57. The Standard & Poor’s 500 Index (.SPX: ) slipped 14.04 points, or 1.29 percent, to 1,073.65. The Nasdaq Composite Index (.IXIC: ) fell 15.49 points, or 0.69 percent, to 2,213.55.

The latest worries about Europe’s debt crisis prompted investors to sell the euro, which dropped 1.5 percent to $1.2383 in late New York trading.

APPLE AND GOOGLE SHINE

Despite the accelerated selling late in the day, some pockets of strength remained in the market. That was especially true in the tech sector.

Apple Inc (Read more about Apple stock future.) (AAPL.O: ) advanced 1.8 percent to $246.76 after Morgan Stanley raised its price target on the stock by $35 to $310 and added the company to its “Best Ideas” list.

Google Inc (Read more about Google Stock Analysis) (GOOG.O: ) gained 1.1 percent to $477.16 after Citigroup added the No. 1 Internet search engine to its top picks live list, saying the recent correction in its stock price created the most compelling risk-reward opportunity in the large-cap Internet sector.

Some deal activity in the tech and health sectors also caught investors’ attention. International Business Machines Corp (IBM.N: ) said it plans to buy Sterling Commerce from AT&T Inc (T.N: ) for about $1.4 billion in cash, while Gentiva Health Services (GTIV.O: ) agreed to buy Odyssey HealthCare Inc (ODSY.O: ) for about $1 billion.

IBM slipped 0.8 percent to $124.45 and AT&T lost 1.7 percent to $24.43. Both IBM and AT&T are Dow components.

In contrast, Odyssey jumped 38.7 percent to $26.75, and Gentiva climbed 13.1 percent to $29.17.

DON’T BET THE HOUSE

Economic data showed sales of previously owned U.S. homes rose to a five-month high in April as buyers rushed to close on contracts before a federal home buyer tax credit expired, although housing inventory also increased.

The PHLX Housing Sector index (.HGX: ) shed 1.6 percent while the Dow Jones U.S. Home Construction index (.DJUSHB: ) lost 1.4 percent.

Volume was light, with about 9.23 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year’s estimated daily average of 9.65 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 19 to 12, while on the Nasdaq, nearly two stocks fell for every one that rose.

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(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

Wall Street sinks on euro-zone bank troubles