NEW YORK - February 10, 2012 - Stocks added to losses Friday, on track to logging their worst session this year, after stalled debt negotiations in Greece, some disappointing economic news, and reports that S&P downgraded a handful of Italian banks.
In the latest round of disappointment from the euro zone, ratings agency S&P downgraded 34 of 37 Italian banks, citing worries over the banking industry and economic risks in the country.
The Dow Jones Industrial Average fell sharply, led by DuPont and Alcoa, after closing at its best level since May 2008.
The S&P 500 and the NASDAQ also slumped. The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged above 20 for the first time this month.
All 10 S&P sectors were firmly in the red, led by materials and energy.
“You had a 7% rally [on the S&P 500] from the beginning of the year and that’s the strongest start since 1987, so you are due for a bit of a consolidation and let investors take a breath,” said Phil Orlando, chief equity market strategist at Federated Investors. “With the headlines associated with Greece overnight, it’s an appropriate place for investors to take a pause.”
Euro zone finance ministers said the debt-ridden nation will need to make further cuts in order to be granted bailout funds. Meanwhile, Greek workers went on strike, protesting against the austerity measures.
Meanwhile, Greece Deputy Foreign Minister Marilisa Xenogiannakopoulou, a member of the Socialist Party, resigned in protest against the tough bailout terms, according to state television.
Adding to woes, Chinese January trade data fell the most since the depths of the financial crisis, signaling further demand decline.
