Irish bailout makes stocks fear more upheaval

Posted Nov. 22, 2010 at 11:26 a.m.

Stocks were lower Monday at the start a holiday-shortened week, as news of progress on Ireland’s rescue package underscored concerns about other troubled European economies.

The Dow Jones industrial average fell 76 points, or 0.7 percent, about 2-1/2 hours into trade. The S&P 500 lost 7 points, or 0.6 percent, and the Nasdaq ticked down 1 point, or less than 0.1 percent.

The declines were broad-based, with 25 of the 30 Dow components lower. Bank of America was the blue-chip component with the biggest losses, down 2.8 percent. Trading volume was on the light side but still within normal range.

On Sunday, Irish Prime Minister Brian Cowen formally requested substantial financial assistance from the European Union and the International Monetary Fund. The group is now working to hammer out final details of a rescue package worth tens of billions of dollars.

“In the morning, it looked like a rally on thoughts that Ireland will be in better shape now,” said Alan Lancz, president of Alan B. Lancz & Associates. “But we really don’t have a catalyst on the upside during this short week.”

Trading could be choppy this week, with many market participants taking time off ahead of the Thanksgiving holiday. All U.S. markets will be closed Thursday in observance.

Investors were especially in “a holding pattern” Monday with no economic news on tap, Lancz said. But later this week brings a full plate of top-tier economic indicators: a revised reading on U.S. economic growth, housing data and durable goods orders, as well as personal income and spending figures.

In addition, the Federal Reserve is scheduled to release minutes from its Nov. 3 policy meeting on Tuesday.

Stocks eked out gains Friday, ending a volatile week with a whimper. The volatility was driven by nervousness over China’s efforts to temper bank lending and the potential bailout for Ireland. Optimism over General Motors’ initial public offering helped limit the downside.

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