Stocks Driven Lower by Europe's Uncertainty
NEW YORK ( TheStreet) -- Stocks sold off on Monday as questions about Europe's economic and political stability rattled Wall Street.
The headlines from across the pond were ugly with a purchasing managers index for the eurozone region falling to a five-month low, French President Nicolas Sarkozy seen as lagging in the country's presidential elections, and Dutch Prime Mark Rutte and his cabinet offering to resign over failed austerity talks.
Wal-Mart Stores (WMT) was a major drag on the Dow Jones Industrial Average , falling nearly 5%, as the world's largest retailer dealt with revelations that it engaged in the bribery of Mexican officials.
The Dow dropped 102 points, or 0.8%, to close at 12,927, after making an intra-day low of 12,845. The S&P 500 fell nearly 12 points, or 0.8%, to finish at 1367. The Nasdaq ended in the negative territory for the fourth-straight day, shedding 30 points, or 1%, to close at 2970.
In the broad market, losers outpaced winners nearly 3 to 1 on the New York Stock Exchange and a little more than 3 to 1 on the Nasdaq. The VIX, which measures market volatility through options activity in the S&P 500, jumped more than 9% to 19.07. A move above 20 is viewed as indicative of rising market fear.
After the bell, Netflix(NFLX) reported a loss of 8 cents per share on first-quarter revenue of $870 million. Analysts were expecting a loss of 27 cents per share, according to Thomson Reuters. The stock was still tanking nearly 14% in extended trading hours on weaker-than-expected guidance for second quarter.
New worries about the health of the eurozone's economy cropped up on Monday after Markit's preliminary composite purchasing managers index fell for the third month in a row to 47.4, down from 49.1 in March, signaling a faster rate of decline of private sector economic activity. Output has fallen seven times in the past eight months.
Also, in France's first round of presidential elections held on Sunday, President Nicolas Sarkozy fell behind opposition Socialist Party candidate François Hollande. Analysts worry that if Sarkozy is voted out and Hollande becomes president it will disrupt the continuity that's been developed between German Chancellor Angela Merkel and Sarkozy, who've worked very closely together on European debt crisis issues.
"Today, uncertainty is raining down on the markets from Europe," says Doug Cote, chief market strategist at ING Investment Management. He said that Sarkozy looks like a "goner" to Hollande.
Adrian Day, president of Adrian Day Asset Management, says "it looks like Hollande will win and he's being very critical of the fiscal pact and wants more stimulation."