Stocks tumble late to end sharply lower
Posted by on November 20, 2011
By msnbc.com news services
Wall Street main stock averages were wavering Thursday as fears about rising yields of debt in Europe overshadowed some upbeat news on the U.S. economy.
Before the open, a report on new claims for unemployment insurance showed a drop to their lowest level in seven months. Separately, U.S. housing starts fell less than expected in October as a drop in groundbreaking for multi-family units narrowly outweighed more new construction of single family homes.
Another report showed the pace of factory activity in the U.S. Mid-Atlantic region slowed more than expected in November.
However, despite the mostly upbeat data, investors remained focused on the troubles in Europe.
Spain and France struggled with government bond auctions, throwing into sharp relief the threat of larger euro zone economies succumbing to the debt crisis that began in Greece and is already lapping at Italy?s shores.
Spanish bond yields hit 6.98 percent Thursday, their highest level since 1997, at a 10-year auction. A French bond auction also saw high yields.
The 7 percent mark is viewed by investors as unsustainable, with both Greece and Portugal forced to seek bailouts at similar levels, as Spain was pulled deeper into the euro zone debt crisis ahead of a parliamentary election on Sunday.
European shares fell, as the rising euro zone sovereign bond yields heightened worries that the currency bloc?s crisis would spread further and that the region is headed for recession.
Asian shares also wobbled as doubts deepened about Europe?s ability to stop the crisis from spinning out of control, with Germany and France split over the European Central Bank’s bond buying role.
St. Louis Fed President James Bullard visited CNBC Thursday and discussed the crisis in Europe and potential responses from the U.S. Federal Reserve:
U.S. stock losses accelerated in the latter part of trading Wednesday after rating agency Fitch said while the outlook on the U.S. banking industry is stable, it could worsen if the euro zone crisis is not resolved quickly.
Investors have recently been forced to weigh the threat of a deepening crisis against U.S. economic data that has been better than expected.
The Associated Press and Reuters contributed to this report.
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