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Wall Street indexes fell on Monday, following the lead of European exchanges, as enthusiasm over a plan to bailout Ireland started to wane and traders began to worry about the problem spreading.
The Dow Jones industrial average was down 93.35 points, or 0.83 percent, while the Standard & Poor’s 500-stock index fell 8.22 points or 0.69 percent. The technology-heavy Nasdaq dropped 3.43 points, or 0.13 percent. On Friday, the Dow Jones industrial average rose 0.2 percent, while the Standard & Poor’s 500 index rose 0.3 percent.
Shares on European exchanges lost their momentum in afternoon trading on Monday after initially opening higher. The Euro Stoxx 50 index, a barometer of euro zone blue chips, lost 1 percent, while the FTSE 100 index in London also dropped 0.7 percent. The CAC 40 in Paris was 0.81 lower, and the DAX in Frankfurt was down 0.11 percent.
The euro, which initially strengthened against the dollar, also slipped as traders began to worry whether other European countries would need some assistance.
“News that the Irish government were going to accept assistance with a debt bailout package certainly gave traders something to cheer about at the start of the week, but there seems to be a creeping realization that this won’t necessarily mark the end of the euro zone sovereign debt crisis,” Will Hedden, a sales trader at IG Index, told The Associated Press.
Ireland’s rescue package, which several European officials said would be worth 80 billion to 90 billion euros, or $109 billion to $123 billion, was made necessary by soaring borrowing costs for the Irish government and ebbing confidence in the country’s troubled banks. Just over six months ago, officials worked out a similar package to aid Greece amid fears that the problems of the euro-zone “periphery” could undermine the common currency.
Although the deal was inevitable, “there are still hurdles ahead for other countries, particularly next year,” Nick Stamenkovic, rate strategist at RIA Capital Markets, told Reuters. Those other countries include Portugal and Spain.
Ireland’s request spurred some concern among traders that Portugal and Spain may also need help in repaying their debts.
Bond prices reacted mildly to the Irish bailout news, which had been expected since last week. The Irish 10-year yield fell 18 basis points, but — at 7.73 percent — still carried a hefty premium to the comparable German bond, the European benchmark, which ticked up 2 basis points to 2.72 percent. The yield on Greek bonds was 11.5 percent.
The dollar fell against other major currencies in early trading in Europe, and then recovered lost ground in the afternoon. The euro, at $1.3672, and the British pound, at $1.5979, were both down slightly. The dollar slipped to 83.46 yen from 83.55 yen, and to $0.9893 Swiss francs from $0.9923 francs.
Asian shares were mostly stronger. The Tokyo benchmark Nikkei 225 stock average rose 0.9 percent. The main Sydney market index, the S.&P./ASX 200, rose 0.3 percent. In Hong Kong, the Hang Seng index fell 0.4 percent as the Shanghai composite index fell 0.2 percent.
Crude oil futures for January delivery rose 35 cents to $82.33 a barrel. Comex gold rose $8.90 to $1,361.20 an ounce.
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