US Markets Slips On Earnings And Euro Zone Concern (10-Jul-2012)
The US markets closed lower on Monday, losing ground for a third session, the longest such streak in more than a month, after Spanish bond yields rose to levels viewed as unsustainable. However, President Barack Obama called for a one-year extension of the George W. Bush-era tax cuts for families earning less than $250,000 a year. That refers to the substantial spending cuts and tax increases scheduled to go into effect at the beginning of 2013 unless Congress acts. The spending cuts and tax hikes will automatically kick in because, last year, Congress failed to reach a deal to shrink the deficit by at least $1.2 trillion. Many economists and Federal Reserve Chairman Ben Bernanke have warned that the economy would be harmed if the fiscal cliff is not addressed. Meanwhile after market hours Alcoa Inc. announced earnings. The aluminum maker's quarterly results mark the unofficial start of reporting for US company earnings. Alcoa's earnings were sharply down from a year ago, but edged past the street's forecasts. Of the 25 companies that have reported second-quarter results, 72% have lowered third-quarter estimates, compared with 44% that reduced expectations after reporting first-quarter results.
In Europe, efforts to help Spain overcome rising borrowing costs amid doubts over the ability of the European Union to implement recently agreed measures aimed at easing financing worries for the euro-zone's fourth-largest economy were in focus as finance ministers from the 17 nations that share the euro met on Monday. However, a final decision on easing Spain's targets would be made when finance ministers from all 27 European Union nations gather on Tuesday. The proposals are said to give Spain an extra year - until 2014 to cut its deficit to 3% of gross domestic product. The country's 2012 deficit target would be raised to 6.3% of GDP from its current forecast of 5.3%.
The Dow Jones Industrial Average closed lower by 36.18 points or 0.28%, at 12,736.30. The S&P 500 finished down by 2.22 points, or 0.16%, to 1,352.46, while the Nasdaq closed down by 5.56 points or 0.19%, to 2,931.77.
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