Stocks extend slide after euro falls to 4-year low; US regional manufacturing data fall short

Stocks fall after euro hits 4-year low, oil drops

NEW YORK — Stocks fell for a third day Monday on growing concerns that Europe’s debt problems will hamper a global rebound.

The Dow Jones industrial average fell about 80 points in late morning trading. It has fallen seven of the last nine days.

Stocks fell after the euro, which is used by 16 countries in Europe, fell to a four-year low. Investors are questioning whether steep budget cuts in countries including Greece, Spain and Portugal will hinder an economic recovery in Europe and in turn, the U.S. Traders are also concerned that loan defaults could ripple through to banks in stronger countries like Germany and France.

The austerity measures are required under a nearly $1 trillion bailout program the European Union and International Monetary Fund agreed to last week. The rescue package provides access to cheap loans for European countries facing mounting debt problems.

The euro fell to as low as $1.2237 early Monday before moving higher. The plunging euro has been driving trading around the globe in recent days. The weakness in the euro has helped boost the value of safe-haven investments like the dollar, Treasurys and gold. It has also driven commodities like oil lower.

Oil fell below $70 a barrel for the first time since February. Oil is priced in dollars so a stronger dollar deters investment in oil. Crude oil fell $1.76 to $69.85 per barrel on the New York Mercantile Exchange. That hit shares of energy companies.

Meanwhile, a disappointing report on regional manufacturing from the New York Federal Reserve weighed on sentiment. A forecast from home-improvement retailer Lowe’s Cos. also fell short of expectations.

The questions about Europe overshadowed other news and dominated trading. Investors in the U.S. who had been growing more confident about a rebound in this country now are questioning whether the problems in Europe will disrupt a recovery.

“We need to quantify how much Europe can hurt us,” said Philip Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. He said it could take a month or two before investors have a better sense of whether the debt problems in Europe will spread.

In late morning trading, the Dow fell 81.47, or 0.8 percent, to 10,538.69. The broader Standard & Poor’s 500 index fell 8.70, or 0.8 percent, to 1,126.98, while the Nasdaq composite index fell 13.50, or 0.6 percent, to 2,333.35.

Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 409 million shares, compared with 490 million traded at the same point Friday.

Stocks remained volatile last week as investors first cheered the European bailout program before becoming skittish about how it would affect the continent’s economy. The Dow tumbled 163 points Friday as the euro plummeted and declining oil prices hurt energy companies.

Bond prices rose Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.44 percent from 3.46 percent late Friday.

Gold rose $6.80 to $1,234.60 an ounce.

Investors looking for signs of an improving domestic economy received mixed data.

The Empire State manufacturing index, which measures activity in the New York region, fell to 19.11 this month from 31.86 in April. Economists polled by Thomson Reuters, on average, had forecast a reading of 30.

Lowe’s reported a better-than-expected first-quarter profit and raised its forecast for the year, but the outlook fell short of analysts’ expectations. Lowe’s fell $1.38, or 5.3 percent, to $24.69.

Home Depot Inc., Wal-Mart Stores Inc. and Target Corp. also are expected to post quarterly numbers this week. Investors will be looking for any sign of growth in consumer spending. Stronger spending by consumers is considered vital to a sustained economic rebound.

Meanwhile, Universal Health Services Inc. agreed to buy Psychiatric Solutions Inc. for about $2 billion in cash. Japan’s second largest drug maker, Astellas Pharma Inc. agreed to purchase U.S. cancer drug company OSI Pharmaceuticals Inc. for $4 billion in cash.

Traders see dealmaking as a sign of economic recovery because it means businesses are more comfortable spending reserves to expand their operations.

Universal Health rose $2.61, or 6.7 percent, to $41.65 and Psychiatric Solutions fell 23 cents, or 0.7 percent, to $32.40.

The Russell 2000 index of smaller companies rose 4.36, or 0.6 percent, to 689.62.

In afternoon trading, Britain’s FTSE 100 rose 0.2 percent, Germany’s DAX index gained was unchanged, and France’s CAC-40 fell 0.5 percent. Earlier, Japan’s Nikkei stock average fell 2.2 percent.