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Stocks end week on edge over Europe's debt woes; Treasury yields fall, oil inches up

June 24, 2011 |  2:36 pm

A week that began with promise on Wall Street ended with investors back in fear mode.

Stocks had a miserable day Friday as prices fell at the outset and mostly drifted lower the rest of the session. Some investors continued to rush into Treasury securities, the classic haven.

The Dow Jones industrial average slid 115.42 points, or 1%, to 11,934.58, ending below 12,000 for the first time since June 16.

Analysts blamed continued nervousness over Europe’s financial system against the backdrop of a slowing global economy. Even as European Union leaders hammered out a new aid package for debt-hobbled Greece, Moody’s Investors Service warned that it may cut debt ratings for major Italian banks.

Oiltrade The EU’s bailouts of Greece, Ireland and Portugal over the last year have raised fears of a 2008-style financial “contagion” that could drag down much larger countries, particularly Italy and Spain.

In a troubling sign, investors pushed up yields on Italian government bonds on Friday. The yield on the country’s two-year debt jumped to 3.30% from 3.17% on Thursday and 3.04% on Wednesday.

The Italian stock market slumped 1.6%, though other European markets were mixed.

The euro currency fell for a third day, ending at $1.419, down from $1.426 on Thursday.

Jitters over Europe drove more investors into the relative safety of Treasury bonds, pushing yields lower. The yield on the 10-year T-note fell to 2.86%, down from 2.91% on Thursday and the lowest since Nov. 30.

Shorter-term Treasury issues were in heavy demand. The yield on one-year T-bills ended at a modern-era low of 0.14%, down from 0.16% at the start of the week.

On Wall Street stocks were broadly lower, ignoring a better-than-expected report on May durable goods orders. The technology sector was hit hard, with the Nasdaq composite losing 33.86 points, or 1.3%, to 2,652.89. Tech giant Oracle Corp. weighed on the sector after the company late Thursday reported weakness in hardware sales, despite an overall strong quarterly earnings report.

Oracle shares fell $1.32, or 4.1%, to $31.14.

Still, the Nasdaq index gained 1.4% for the week after five straight weekly losses.

The Dow lost 0.6% for the week, the seventh weekly loss in eight weeks. The Standard & Poor’s 500 index, which fell 1.2% on Friday, was off 0.2% for the week.

U.S. crude oil prices, which tumbled $4.39 a barrel on Thursday, to $91.02,  after developed nations decided to release some of their reserves to boost supplies, couldn’t sustain the slide. Near-term futures in New York closed up 14 cents at $91.16, but down from $93.01 a week earlier.

-- Tom Petruno

Photo: Trading in the oil options pit in New York on Friday. Credit: Shannon Stapleton / Reuters