US: Stocks drop on fears of Greek default

[NEW YORK] Wall Street stocks on Monday followed European equity markets lower, dropping on growing fears of a Greek default and exit from the eurozone.

The Dow Jones Industrial Average fell 95.08 points (0.53 per cent) to 17,729.21.

The broad-based S&P 500 dropped 8.73 (0.42 per cent) to 2,046.74, while the tech-rich Nasdaq Composite Index shed 18.39 (0.39 per cent) to 4,726.01.

Greek Prime Minister Alexis Tsipras vowed over the weekend to stand by his anti-austerity electoral promises, raising worries of a default on 315 billion euros (S$483.1 billion) in debt.

German Chancellor Angela Merkel said Monday she awaited a "sustainable" proposal from Greece that respected the "basic rules" of the bailout program as set by international lenders.

The Athens stock market closed down nearly five percent, and markets in Britain, France and Germany also fell.

"The concern of a messy exit of Greece (plays) on the backdrop of an European economy that is already unstable," said Art Hogan, chief market strategist at Wunderlich Securities.

Dow member McDonald's fell 1.4 per cent as global comparable sales dropped 1.8 per cent in January. Sales fell 12.6 per cent in its Asia/Pacific-Middle East-Africa region, due in part to weakness in Japan.

Airline stocks sank after American Airlines trimmed its profit forecast, in part due to higher-than-expected fuel costs. Data also showed lower customer traffic on planes in January 2015 compared with the year-ago period.

American fell 3.4 per cent, Delta Air Lines lost 2.3 per cent and United Continental dropped 4.5 percent.

Toymaker Hasbro rose 7.0 per cent after reporting fourth-quarter net income gained 4.1 percent. Sales jumped 21 per cent in the boy's category thanks to strong performance of super-hero figures and other toys associated with Marvel comics.

Drilling company Diamond Offshore finished up 2.4 per cent as net income translated into 72 cents per share, above the 65 cents projected by analysts. The company cut its special dividend in response to sinking investment from oil companies.

Motorola Solutions, which develops communications and software technology, rose 4.8 per cent on a report that it is seeking a buyer. Potential buyers include private-equity firms and defense contractors, according to Bloomberg News.

Bond prices were mixed. The yield on the 10-year US Treasury held steady at 1.96 per cent, while the 30-year advanced to 2.54 per cent from 2.53 per cent Friday. Bond prices and yields move inversely.

AFP