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Wall Street Recovers from Plunge as Europe Holds Sway

Wednesday, 23 May 2012 12:50 PM

 

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Stocks ended mixed after a sharp recovery in the last hour of trading Wednesday.

The Dow Jones industrial average ended down seven points at 12,496, according to preliminary closing figures.

The threat of a financial crisis spreading from Europe shook markets. The euro dropped to a nearly two-year low against the dollar and oil prices sank to their lowest this year. The Dow spent most of the day down more than 100 points, then recovered 84 points in the final hour.

Facebook rebounded 3 percent to $32 after two days of losses.

The Standard & Poor's 500 index rose two points to 1,319. The Nasdaq rose 11 points to 2,850.

Three stocks rose for every two that fell on the New York Stock Exchange. Volume was above average at 4 billion.

In Brussels, leaders of the 27 countries that make up the European Union met to discuss ways to keep the debt crisis in Europe from getting worse, including proposals to promote jobs and growth.

Analysts are turning increasingly skeptical that European leaders will succeed at preventing Greece from dropping the euro or agree on ways to jump-start the region's economy. The Organization for Economic Cooperation and Development warned Tuesday that the 17 countries that use the euro risk falling into a "severe recession."

Germany's DAX and France's CAC-40 closed more than 2 percent lower. The euro continued falling against the dollar, reaching $1.25, its lowest level since July 2010. Concerns about the stability of the European currency union if Greece leaves have knocked 5 percent off the euro this month. Yields on German government bunds fell as money shifted into low-risk investments.

If Greece exits, it could spread havoc throughout the global financial system. Bond traders may turn on other struggling governments in Spain and Italy. One big fear is that people in Spain and Italy will start a bank run, pulling euros out of banks for fear that their countries will soon follow Greece's lead. European banks have close ties to U.S. banks.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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