Stocks fall as euro worries overshadow US growth
Stock indexes fall as euro worries push dollar higher; Senate passes tax cut package
In this Dec. 14, 2010 photo, trader Glenn Kessler works on the floor of the New York Stock Exchange. (AP Photo)
NEW YORK (AP) -- Early gains in the stock market evaporated Wednesday after worries about Europe's debt crisis overshadowed signs of growth in the U.S. Bond prices fell, sending long-term interest rates higher again.
The euro fell 1.2 percent against the dollar after Moody's said that it may lower Spain's credit rating. The stronger dollar hurts U.S. companies that do a lot of business overseas. The Standard & Poor's 500 index, the broadest measure of large U.S. companies, fell 0.5 percent.
Stock prices started the day higher after reports showed that U.S. manufacturing industry is growing and inflation remains under control. The Federal Reserve said U.S. factory output rose for the fifth straight month in November. A separate report showed that consumer prices stayed flat last month.
In the late afternoon, the Senate overwhelmingly passed a $858 billion package that will extend tax cuts passed during the Bush administration for another two years. The measure now goes to the House, where it is expected to pass despite complaints by Democrats over what they see as overly generous estate tax rates for the rich.
The unfinished tax bill made some investors pause. "No one is going to make any major planning decisions until this bill gets passed," said Tim Speiss, a partner at EisnerAmper LLP, a financial planning firm. "I'm working with a lot of companies who are postponing deals until they know what the tax rates will be."
The Dow Jones industrial average fell 19.07 or 0.2 percent, to 11,457.47.
The broader Standard & Poor's 500 index fell 6.36, or 0.5 percent, to 1,235.23.
The Nasdaq composite index fell 10.5, or 0.4 percent, to 2,617.22.
Coca Cola Co. rose 1.3 percent to lead the 30 stocks that make up the Dow index. Alcoa Inc., which fell 1.7 percent, was the worst performing stock in the index.
Consumer staples companies were the only one of the 10 groups that make up the S&P 500 index to rise.
Boston Beer Co.,the maker of Sam Adams beer, rose 12.1 percent to $94.97 after it raised its 2010 earnings forecast. The company said it is shipping 12 percent more products than last year.
Ryder System Inc. gained 4.8 percent after an RBC analyst raised his investment rating on the trucking company, saying he expects demand for its services to rise.
Treasury prices fell, pushing their yields higher. The yield on the 10-year Treasury note rose to 3.53 percent from 3.45 percent the day before. That's the highest the yield has been since May 13. The yield helps set interest rates on mortgages and other kinds of loans.
Bond yields have been rising since early October because investors expect the economy to improve. They also anticipate higher budget deficits because of the tax cut package.
Two stocks fell for every one that rose on the New York Stock Exchange. Consolidated volume was 4.6 billion shares.