Stocks dropped again Wednesday as investors pondered developments in Europe, where currency fluctuations and regulatory moves created an uncertain picture.
Volatility continued to shake the markets. Although the Dow Jones Industrial Average finished down 67 points at 10444, at midday the benchmark index stood down as many as 186. The broader indexes also posted losses. The S&P 500 shed 6 at 1115, and the Nasdaq lost 19 at 2298.
In Europe, Germany’s ban on the naked short selling of euro-zone bonds, credit default swaps and certain equities spooked traders overseas and at home. The euro briefly dropped to 1.2210 before the open but rose to trade at 1.2390.
The Labor Department said the seasonally-adjusted consumer price index fell 0.1% last month, the first drop since March 2009, as energy prices fell. In March, consumer prices were up an unrevised 0.1%. Underlying consumer prices, which strip out volatile energy and food items and are closely-watched by the Fed, were unchanged for the second month in a row. Economists surveyed by Dow Jones had expected the headline inflation rate to remain unchanged and the core consumer price index to rise by 0.1%.
In a separate report, the Labor Department said real average weekly earnings rose 0.4% in April from March. Over the past six months, average weekly earnings have risen by just 1.2%, as a soft labor market prevents workers from demanding higher pay.
Wednesday marks the first day of the hastily-drawn-up German short-sale ban. Plans for the ban helped exacerbate losses in U.S. stocks Tuesday afternoon, with the Dow closing down nearly 115 points, as it served to reinforce, rather than dispel, worries over the health of European governments and the lenders that possess their debt.
As the ban took effect Wednesday morning, stocks in Europe dropped sharply, particularly financials such as Barclays (BCS) that aren’t subject to the ban, while losses for German financials including Deutsche Bank (DB) were limited.
The euro recovered some of its Tuesday slump. The U.S. Dollar Index, reflecting the U.S. currency against a basket of six others, slipped 0.2%. Treasurys also fell, pushing the yield on the 10-year note up to 3.36%. Crude-oil futures dropped and gold futures also slumped.
Dow Jones Newswires contributed to this report.
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