What is the effect of European debt crisis on the American stocks?

This is not the first time that the European debt crisis has been creating negativity all around in the financial markets. Moreover, with the warning that Moody’s Investors Service is going to review the credit ratings of the European nations, the optimism of the investors seemed to turn over into a new fear. Thus, the stocks and all of the other kinds of risky assets took a plunge last week. So, if you had been thinking of investing your money in stocks so as to earn extra dollars and pay off debt, you should consider the stock markets all around the world and their performances.

European debt crisis and stocks

The Fitch Ratings were of the opinion that the European zone is again going to face an economic downturn as it is still wrestling hard with the sovereign debt crisis. The euro thus hit almost a 10 week low and has plunged to nearly 2 cents. The yields on the Italian bonds rose as the investors almost annoyed about the debt burden of the nation. Thus, the European stocks fell and the treasury yields too fell as almost all of the investors shifted their money into the U.S. government debt.

The US stock markets too have been on the edge throughout the last week in the anticipation of a summit deal that they expected would put a hold to the debt crisis of the euro zone, and then make the way easier for the greater action by ECB so that they can hold down the bond yields. However, the advancements from the European simply resulted in disappointment.

Thus, as a result, the U.S. stocks too fell broadly. There have been declines for all of the 30 stocks with regards to the Dow Jones industrial average and all of the other 10 industry groups in case of the Standard & Poor’s 500 index.

The Dow too fell by 222 points, which is 1.8 percent. Thus, it resulted to 11,962 shortly in the last week. On the other hand, the Intel Corp. fell by 5.4 percent immediately when the chipmaker affirmed that there was a shortage of the hard drives and that this is going to limit the shipments, thereby pushing over the revenue outlook of the fourth-quarter far below than what the Wall Street had actually expected.

The Standard & Poor’s 500 index too have fallen by 26 points which is by 2.1 percent, and it amounted to 1,229. On the other hand, the Nasdaq composite index dropped by around 51 points, which is 1.9 percent, and so it amounted to 2,595.

Europe still now is in a volatile stage and this is having a negative effect on the US stock markets too.

Brook Peterson

Authior Bio: BP is a regular writer for various finance related Communities including Debt Consolidation Care (http://www.debtconsolidationcare.com/). She is a PG degree holder in Marketing and Finance and right now working in a reputed bank as a relationship manager. She is well equipped to write articles on debt consolidation , debt settlement, frugality, savings, economies of states etc.