Europe Continues to Clobber the Dow

The Dow Jones Industrial Average (INDEX: ^DJI  ) is feeling the weight of the world once again today, as investors react to fears surrounding the increasing likelihood that Greece will be forced, or at a minimum encouraged, out of the eurozone. After falling more than 150 points shortly after opening, the Dow recovered slightly by 12:30 p.m. EDT. It's now down about 90 points, or 0.7%, to 12,842.  Nevertheless, the flagship U.S. index is slated to extend its losing streak to six days, making this the most extended slump for the market since August of last year. As we approach a third summer of Europe-induced fears, investors reacted in typical risk-off fashion, fleeing equities in pursuit of perceived safe havens, particularly U.S. Treasuries, where yields on the 10-year notes are falling to levels not seen since early February.

Last weekend's electoral outcome in France is becoming nothing more than a side story as investors focus on the election outcome from Greece, where anti-austerity parties won over one-third of the nation's voters. The result was a loss of parliamentary majority for Greece's pro-austerity incumbent parties. Today, this growing uncertainty in Athens drove European officials to consider the delay of 5.2 billion euros tied to the 130-billion-euro bailout approved in March. While this move may turn out to be nothing more than a political gesture encouraging Athens to support previously agreed-upon austerity measures, it speaks to the severity of the situation.

Leading the Dow's decline back in the U.S. is General Electric (NYSE: GE  ) , down around 2% as investors digest the impact of European concerns on the conglomerate, particularly its industrial businesses.  Another laggard on the day is JPMorgan Chase (NYSE: JPM  ) , down about 2% on the day. In its most recent 10-K, the global bank outlined its European loan book, which included over $100 billion in broad European exposure, including gross exposure to Portugal, Ireland, Italy, Greece, and Spain amounting to $27 billion.

Two companies breaking the sour mood on the day are Walt Disney (NYSE: DIS  ) and Wal-Mart (NYSE: WMT  ) . Disney shareholders, digesting a stellar earnings report from yesterday, promptly expressed their delight by bidding shares up about 2.5%. Another encouraging development for Disney is its ability to shake off last quarter's John Carter flop by smashing box office records with last weekend's release of The Avengers. Wal-Mart, which reports earning next week, was up only marginally, an encouraging performance on an otherwise poor day for the Dow constituents. The world's largest retailer has seen its stock price bounce back from recent lows, which were driven by allegations of bribery by representatives in Mexico. Expect investors to pay close attention to developments south of the border in the months ahead.

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Brenton Flynn holds no position in any company mentioned. The Motley Fool owns shares of Walt Disney and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Walt Disney and creating a diagonal call position in Wal-Mart Stores. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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