May 18th, 2010
06:42 PM ET

Stock, oil prices slump as euro hits fresh four-year low

Tumbling stocks overshadow U.S. retailer earnings

Stocks slumped Tuesday as the euro touched a fresh four-year low versus the dollar, keeping Europe's woes front and center and overshadowing better-than-expected earnings from big U.S. retailers.

The Dow Jones industrial average lost 115 points, or 1.1 percent, according to early tallies. The S&P 500 index lost 16 points, or 1.4 percent. The Nasdaq composite lost 37 points, or 1.6 percent.

Stocks had managed some early gains as investors focused on Home Depot and Wal-Mart Stores' earnings and an improved report on home construction. The stock sell-off picked up steam in the afternoon as the euro flirted with and then fell below a four-year low hit on Monday.

Technology and financial shares led the declines Tuesday. Intel, Cisco Systems, Hewlett-Packard and Advanced Micro Devices were among the big tech losers. Bank of America, Wells Fargo and a number of regional banks all
declined, dragging down the KBW Bank index by 3.7 percent.

Weakening euro, stronger dollar dampen demand for oil

Oil prices slipped to a new seven-month low Tuesday as the dollar neared a new four-year high against the euro.

Crude for June delivery slipped 67 cents, or about 1 percent, settling at $69.41 a barrel Tuesday. The last time crude fell below that price was September 29, when it settled at $66.71.

A weakening euro and stronger dollar dampens demand for oil because it makes the commodity, which is priced in the U.S. currency, more expensive for foreign investors. Reports that Germany will ban so-called "naked" short-selling tomorrow spooked currency investors and drove the euro down, analysts said.

Euro hits four-year low

The euro pared fragile gains Tuesday, touching a new 4-year low, amid new concerns about Europe's debt crisis. The euro plummeted 1.5 percent on the dollar at $1.220 on Tuesday, hitting a fresh four-year low. The European currency had fallen to a four-year low Monday morning versus the dollar, crashing through the key technical level of $1.23 to $1.2234.

The dollar rose 1.0 percent versus the British pound to $1.4330. It was down 0.4 percent against the Japanese yen at ¥92.243. Earlier Tuesday the European Union's statistics bureau said consumer prices in the zone jumped 0.5 percent in April over the previous month, a 1.5 percent increase over April 2009.

The results were in line with market expectations.

Treasurys rally as euro plunges to four-year low

Treasurys rallied Tuesday as stocks closed lower, the euro tumbled and investors digested conflicting economic data from the government.

The benchmark 10-year note rose 30/32 to 101-1/32, pushing the yield down to 3.38% from 3.49% on Monday. Bond prices and yields move in opposite directions. The 30-year bond added 1-24/32 to 101-31/32  and yielded 4.25%, while the two-year note edged up 4/32 to 100-16/32 with a 0.75% yield. The 5-year note rose to 101-29/32, yielding 2.1%.

Investors fled to the safety of the bond market Monday as stocks lost earlier gains and the euro tumbled to a fresh four-month low amid renewed focus on European debt. Despite a $1 trillion European rescue package introduced to stabilize the euro and help debt-choked nations like Greece, investors aren't convinced that the region is out of trouble just yet.

CNNMoney.com reporters Alexandra Mooney, Ben Rooney, Chavon Sutton, Blake Ellis and Annalyn Censky contributed to this report.

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soundoff (3 Responses)
  1. ruffnutt

    time to print up some more euros

    May 18, 2010 at 7:27 pm | Report abuse |
  2. Eric

    Don't chase stocks. If you have money in the market and you picked the right stocks in the first place, you have nothing to worry about. If you sell to 'get out' and then buy back in, you'll likely eat up returns with fees. Instead, when the price of stocks is at a good value, buy more and you'll make good returns. If you don't know what a 'good value' is, then you shouldn't be investing in the first place.

    May 26, 2010 at 1:50 pm | Report abuse |
  3. http://www.StocksTraining.com

    Greece is definitely in trouble and the rest of Europe and other debt ridden countries are going to start paying a serious price with inflation.

    June 4, 2010 at 5:58 pm | Report abuse |