Stocks slumped on Wednesday, weighed down by concerns that some European leaders might be leaning toward cutting Greece out of the euro zone.
The Dow Jones industrial average closed at 12,780.95, down 97.33 points or 0.8 per cent – marking its worst percentage decline in 2012. The broader S&P 500 closed at 1343.23, down 7.27 points or 0.5 per cent. Canada's S&P/TSX composite index fared considerably better, though, closing at 12,362.03, up 7.56 points or less than 0.1 per cent.
The retreat comes as the euro zone becomes the source of yet more confusion about the sovereign-debt crisis there. No sooner had Greece provided guarantees that it would stick to austerity measures after general elections later this year than some countries – notably, Germany – suggested that bailout funds be delayed or that Greece be allowed to leave the union.
At the same time, a report showed that Greece's economy contracted by an alarming 7 per cent in the fourth quarter – and austerity measures are unlikely to help the situation. While Europe's economy contracted by a far more modest 0.3 per cent during the quarter, which was slightly better than what economists had been expecting, it nonetheless is struggling.
The concerns overshadowed comments made by China's top central banker that the country would help Europe get through its crisis, which initially pointed to strong gains ahead of the market open in North America. As well, investors seemed to ignore minutes from the last Federal Reserve monetary policy meeting, released on Wednesday afternoon, which suggested that U.S. central bankers were leaving additional stimulus measures on the table.
The market was also roiled by at least one stock-specific move. Apple Inc., which has been driving market gains and dominating overall earnings moves recently, made a rare reversal: After being up 3 per cent in early trading, the stock fell. It ended the day down 2.3 per cent, or back below the $500-threshold – possibly affected by news that it had asked Internet sellers in China to stop selling the iPad 2 amid a patent dispute there.
U.S. bank stocks were also weak: Bank of America Corp. fell 2.5 per cent and JPMorgan Chase & Co. fell 1.4 per cent.
Canadian energy stocks were relatively strong, which helped keep the TSX in positive territory, after the price of crude oil rose to $101.80 (U.S.) a barrel, up $1.06. Talisman Energy Inc., which reported its quarterly results before trading began, rose 4.9 per cent. Suncor Energy Inc. rose 1.5 per cent.
Gold rose to $1,728.10 an ounce, up $10.40. However, Barrick Gold Corp. fell 0.2 per cent.