NEW YORK — Europe’s latest efforts to quell its financial crisis left investors exasperated Monday, causing steep losses in stock markets on both sides of the Atlantic.
In Europe, Spain formally asked for help to rescue the country’s ailing banks, but its request left many questions unanswered, including how much it needs of the $125 billion loan package offered by other European governments. The uncertainty unsettled markets, pushing borrowing costs higher for Spain’s government. Spain’s stock market plunged 3.7 percent.
“Right now, it’s all about Europe, and confidence is pretty low,” said Doug Cote, chief market strategist for ING Investment Management. “The policies that they are proposing are too little, too late.”
The Dow Jones industrial average dropped 138 points to close at 12,502.66, a loss of 1.1 percent.
Big bank stocks slumped. Many analysts expect banks in Europe and the U.S. to suffer from a freeze-up in Europe’s financial system if Spain fails to rescue its troubled banks.
Spain’s banks have been hobbled by loans made during a real-estate bubble, and the government has been inconsistent about how much help it will need to save them.
Bank of America dropped 4 percent, the biggest fall among the 30 stocks in the Dow. BofA’s stock lost 34 cents to $7.60. JPMorgan Chase fell 67 cents to $35.32, and Citigroup dropped $1.24 to $26.75.
Analysts worry that Europe’s piecemeal approach to its spreading government debt crises may fall short and that the banking system of a large country such as Spain could collapse. That could shock tightly connected global financial markets.
“It’s the same headline risk that we’ve been dealing with for God knows how long,” said Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management in Pennsylvania. “Everybody wants something to happen sooner or later, and nothing’s happening.”
The Standard & Poor’s 500 fell 21.30 points, or 1.6 percent, to 1,313.72. The Nasdaq composite lost 56.26 points, or 1.9 percent, to 2,836.16.
$79.21
Price per barrel for benchmark U.S. crude — down 55 cents to continue a slump that has brought the price down
$110
Price per barrel in February
