Global stocks are falling Tuesday morning as political uncertainty in Italy sends European stocks sharply lower. Bond prices are climbing and yields are falling, while the euro fell to its lowest levels of 2018 compared to the dollar. The decrease in bond yields is hurting banks. Industrial and health care companies are also faring worse than the broader market.
KEEPING SCORE: The S&P 500 index sank 12 points, or 0.5 percent, to 2,708 as of 10 a.m. Eastern time. The Dow Jones industrial average lost 144 points, or 0.6 percent, to 24,608. The Nasdaq composite fell 6 points, or 0.1 percent, to 7,426. The Russell 2000 index of smaller-company stocks slid 2 points, or 0.1 percent, to 1,624.
U.S. markets were closed Monday for the Memorial Day holiday.
ITALIAN INSTABILITY: Investors feared the possibility of a financial crisis in Italy, the third largest economy in Europe, as well as the possibility that elections in the fall could become a referendum on Italy’s use of the euro. Italian President Sergio Mattarella picked Carlo Cottarelli for prime minister after the anti-establishment 5-Star Movement and right-wing League refused to withdraw an anti-euro candidate as economy minister. That ended their attempt to establish a government after inconclusive elections in March.
Cottarelli is likely to lose a vote of no confidence in parliament, which would mean another round of elections. Italy’s FTSE MIB stock market index lost 2.3 percent.
Britain’s FTSE 100 sank 1.2 percent and the French CAC 40 slumped 1.2 percent. Germany’s DAX lost 1.1 percent.
In Spain, that country’s parliament will hold a vote of no confidence in Prime Minister Mariano Rajoy after graft convictions of businesspeople and officials tied to his conservative Popular Party. All major parties, except for the ruling People’s Party, are calling for Rajoy to step down. The Spanish IBEX 35 sank 2.2 percent.
CURRENCIES: The dollar rose to 108.88 yen from 109.37 yen. The euro sank to $1.1577 from $1.1669.
BONDS: Bond prices rose. The yield on the 10-year Treasury note fell to 2.87 percent from 2.93 percent late Friday.
Bank stocks declined along with the falling bond yields, which force interest rates on loans lower. JPMorgan Chase lost 1.4 percent to $109.07 and Bank of America fell 1.3 percent to $29.76.
EARLY LAGGARDS: Among health care companies, Johnson & Johnson fell 1.2 percent to $120 and Thermo Fisher Scientific lost 1.4 percent to $201.75. General Electioc took the worst losses among industrial firms as it sank 2 percent to $14.35, while Delta Air Lines lost 1.9 percent to $54.82.
ENERGY: Benchmark U.S. crude fell 1.1 percent to $67.13 a barrel in New York. Oil prices have slumped in the last week following reports that OPEC countries and Russia could start pumping more oil soon. Brent crude, used to price international oils, rose 0.6 percent to $75.80 per barrel in London.
KINDER MORGAN: Kinder Morgan climbed 2.4 percent to $16.27 after the Canadian government said it will buy an oil pipeline to the Pacific coast to ensure it gets built. Kinder Morgan will get $3.4 billion in the deal. The company halted essential spending on the project and said it would cancel it altogether if the national and provincial governments could not guarantee it.
ASIA’S DAY: Japan’s Nikkei 225 fell 0.6 percent while South Korea’s Kospi lost 0.9 percent. Hong Kong’s Hang Seng index plunged 1 percent.