Greek drama irks US, European stocks

IMF walk away from talks and concerns about Greece’s default lowers markets

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

A setback in talks between Greece and its creditors helped knock the stock market lower on Friday, amid renewed concerns that the country could default on its debts.

Despite the drop, the Standard & Poor's 500 index managed to eke out a 1-point gain for the week, snapping a two-week slump.

An unexpected decision by the International Monetary Fund to walk away from talks with Greece spurred the selling. At a summit meeting in Brussels late Thursday, the IMF pulled its negotiators out of talks with Greece, saying there had been no progress and that major differences remained on key issues. Without a deal by the end of the month, Greece faces the prospect of going bankrupt and dropping the euro currency.

The S&P 500 slipped 14.75 points, or 0.7 percent, to close at 2,094.11. The Dow Jones industrial average fell 140.53 points, or 0.8 percent, to 17,898.84, and the NASDAQ composite lost 31.41 points, or 0.6 percent, to 5,051.10.

The losses were modest but broad: All 30 companies in the Dow and all 10 industries in the S&P 500 finished with losses.

Speculation over Greece's fate and the Federal Reserve's first interest rate increase have weighed on markets over recent weeks. Many think an improving US economy will push the Fed to raise its benchmark interest rate later this year for the first time since the Great Recession. The Fed's ultra-cheap interest rates have helped fuel the six-year bull market in stocks.

Major indexes in Europe slumped on Friday, wiping out gains from earlier in the week. Greece's market fell the most, with the main Athens index down 6 percent. Germany's DAX sank 1.2 percent, and the CAC-40 in France finished with a loss of 1.4 percent. Britain's FTSE 100 lost 1 percent.

In Asia, Japan's Nikkei 225 inched up 0.1 percent. In China, the Shanghai composite index advanced 0.9 percent, and Hong Kong's Hang Seng rose 1.4 percent.

Back in the US, shares of Wingstop vaulted 61 percent in their first day of trading as a public company. The chicken-wings chain raised $110.2 million in its initial public offering late Thursday, selling shares at $19 each. Wingstop soared $11.59 to $30.59.

Government bond prices wavered, finishing the day slightly lower. The yield on the10 -year Treasury inched up to 2.39 percent from 2.38 percent the day before.

In metals trading, gold fell $1.20 to settle at $1,179.20 an ounce, while silver slipped 14 cents to $15.83 an ounce. Copper picked up a penny to $2.68 a pound.

Oil fell for a second straight day after reaching a high for the year on Wednesday. Benchmark crude oil sank 81 cents to settle at $59.96 a barrel. Brent crude, an international benchmark, dropped $1.24 to $63.87 a barrel.