Stock prices and the euro fell Monday as investors worried that Ireland’s request for financial assistance may not be the last bailout needed in Europe.
Ireland formally asked for help from its neighbors over the weekend after falling into a financial crisis brought on by mounting losses at three of its nationalized banks. Details of the loan package were still being worked out, but Irish Finance Minister Brian Lenihan has said the rescue would not exceed 100 billion ($137 billion).
It was the second time that the European Union has come to the rescue of one of its 16 members that use the euro. In May, the EU and the IMF committed $140 billion to Greece to prevent the country from defaulting on its debt. Euro zone members have been willing to prop up each other’s finances in hopes of avoiding a financial crisis that could cause the value of the euro to plummet.
The request initially pushed stocks higher in Europe. But the Euro Stoxx 50, an index of blue chip companies in countries that use the euro, fell 0.7 percent in afternoon trading there.
The Dow Jones industrial average was down almost 90 points in morning trading.
Ireland’s request for assistance does not put an end to the questions facing the euro zone. Fellow members Spain, Portugal and Italy are also saddled with heavy debt burdens and investors fear that they may also need a financial lifeline, putting additional pressures on the budgets of EU members. The euro fell 0.8 percent against the dollar.
“It’s been difficult for the European Union to get ahead and stay ahead of the market’s concerns, despite the large sums they are clearly willing to dedicate,” said Robert Tipp, the chief investment strategist for Prudential Fixed Income. Ireland’s announcement that it would seek assistance contributed to stock losses because it was not detailed enough to restore investor confidence, he said.
The Dow Jones industrial average fell 87.89, or 0.8 percent, to 11,115.69 in late morning trading.
The broader S&P 500 fell 8.50, or 0.7 percent, to 1,191.23. The technology-focused Nasdaq composite index fell 3.41, or 0.1 percent, to 2,514.71.
All 10 industry groups that make up the S&P 500 index were down. Financial and energy companies fell the most, with each losing more than 1.4 percent.
Investors will sort through a full plate of economic data this week but trading will be shortened by the Thanksgiving holiday on Thursday.
Reports set to be released Tuesday and Wednesday include October home sales, an update of consumer sentiment, and revisions to earlier estimates of the third-quarter gross domestic product.
Some economists expect that the latest reading on U.S. economic growth for the third quarter will be slightly higher that the previously estimated 2.0 percent increase.
Tyson Foods Inc. announced that it beat analyst estimates and earned $213 million, or 57 cents per share, during the last quarter. The meat producer lost $457 million, or $1.23 per share, a year ago. Shares rose 0.5 percent to $16.18.
Movie rental company Netflix Inc. said it will shift its focus to streaming television shows and films online, a departure from its model built around sending DVDs to customers in the mail. The company raised the price of its DVD subscription plans and will soon launch a cheaper streaming-only plan in the U.S. Shares rose $13.41, or 7.8 percent, to $186.43. The company’s shares have more than tripled this year.
Health insurer Humana Inc. said it plans to purchase privately-held health care company Concentra Inc. for $790 million in cash. Humana rose $1.99, or 3.6 percent, to $58.02.
Hewlett-Packard Co. will release earnings after the market closes. It will be Hewlett-Packard’s first earnings report since former chief executive Mark Hurd resigned in August amid allegations of sexual harassment. He was replaced by chief financial officer Leo Apotheker.