The S&P 500 Index fell 43.85 on Monday,down 2.09%,on worries that Greece might leave the Euro-zone,or might at least cause unfortunate ripple effects throughout the global economy.The country is expected to miss a Tuesday debt payment of 1.84 billion dollars to the IMF.Technically,that would not be a default,since the IMF payment does not have the status of a bond coupon payment,for instance.Still,it is plenty bad for the stock market,as is the unknown endpoint of Greece's tortured negotiations with its creditors,and the Sunday referendum basically on whether Greece should abandon the euro for its old currency,the drachma.
The run on Greek banks could become contagious,spreading to Spain,Portugal and even Italy.If that happens,the US economy,with its close ties to Europe,could suffer as well.
The market was shaken by S&P's opinion that the probability of the so-called Grexit is 50%,and a commercial default is inevitable within six months.Greece's credit rating was also lowered by S&P to CCC-.
Investors sought refuge in gold,which rose 0.52%,while Treasury bonds were basically flat and utility stocks fell less than the broader market.*
Utilities Select Sector SPDR ETF (XLU),Market Vectors Gold Miners ETF (GDX),SPDR Gold Trust (GLD),iShares 7-10 Year Treasury Bond ETF (IEF)
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