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Greece Debt Overshadows Upbeat US Reports


U.S. stocks rode a wave of pessimism Tuesday on new worries about the Greek debt crisis. Not even better than expected economic reports were able to lift key U.S. stock indexes, which closed more than two percent lower at the end of the trading day. The stock sell-off followed earlier declines in Europe, where investors are growing increasingly nervous about the prospects of a bailout package for Greece.

Stock markets in Europe and the U.S. tumbled Thursday on fears that the Greek debt crisis will not be an easy problem to fix.

Investors see the steady string of protests in Greece as signs that the government could face difficulties enforcing deep spending cuts that are conditions to a $146 billion debt-relief package for Greece.

On Wall Street, the fears sent the Dow Jones Industrial average below 11,000 points. But some analysts say the drop is temporary.

Investment adviser Hugh Johnson says improving corporate profits and the widespread global recovery now underway will insure stock prices will continue to rise. "If we still get a continuation of that process the markets are going to go higher," he said.

Worries about Greece eclipsed positive economic signals from the U.S. on Tuesday.

Video clip: Protesters in Greece clash with police

Among the bright spots -- better than expected gains in manufacturing, and a five point rise in pending home sales.

"There is no question that Greece will to some extent affect Europe, and to some extent affect the U.S., but not nearly as much as to derail the bull market. That is the important point," Johnson said.

Many in Europe are not so confident. The 16-nation euro has fallen to its lowest level against the dollar in 12 months. That means weaker profits for U.S. companies that do business in Europe.

Investors are also worried that the ballooning size of the Greek bailout could make it tougher for European nations to rescue larger economies such as Spain, which has recently shown signs of economic weakness.

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