The Dow Jones Industrial Average (INDEX: ^DJI ) plunged more than 200 points today, for a whopping 1.6% loss, by far its biggest in 2012.
Greece is once again in the news amid concerns that not enough investors will go along with a March 20 bond swap that is needed for the country to meet the amount it owes. If not enough investors agree to participate, Greece could force a majority-wins vote, but that could trigger credit-default-swap payments and rattle financial markets.
Cyclical materials and construction stocks Alcoa (NYSE: AA ) and Caterpillar (NYSE: CAT ) took the brunt of the market selloff, for a repeat performance as the two worst-performing Dow stocks. The ongoing crisis in Greece, with its potential to spill over into Europe if not properly handled, may be the most prominent threat to the global economy, but two others have been rearing their heads lately. Yesterday, China's premier reduced its GDP target from 8% to 7.5%; and the potential showdown with Iran has elevated oil prices, temporarily taking the wind out of construction and manufacturing.
Naturally, bank stocks took it on the chin, too. The big five banks, Citigroup (NYSE: C ) , Goldman Sachs, Morgan Stanley, Bank of America (NYSE: BAC ) and JPMorgan Chase, reportedly have a combined $80 billion in exposure to troubled European debt, though they're relying on credit default swaps to hedge that exposure down to $50 billion. Trading has been one of the weakest areas in banking lately, and an exacerbated financial crisis won't help matters one whit.
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