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US stocks follow global markets higher, but investor reaction to Spain bank rescue is muted
NEW YORK (AP) ' Investors don't appear to be sold on a rescue of Spanish banks.
Stocks on Wall Street were only marginally higher Monday after European countries said they would lend Spain as much as $125 billion to save its ailing financial industry. Stocks in Europe gave up some of their early gains, too.
The Dow Jones industrial average was up just 20 points at 12,574 about an hour into trading. The Standard & Poor's 500 index was up a point and a half at 1,327. The Nasdaq composite was down a fraction of a point.
Spain is the fourth euro nation to seek a rescue, after Greece, Portugal and Ireland. A financial crisis has gripped Spain since 2008, when a real estate bust caused big losses for many banks.
Investors fear that if any of Spain's banks fail, it could lead to a financial contagion around the globe and hurt an already fragile world economy.
The rescue for Spanish banks had sent European stocks higher, with France's CAC-40 and the DAX in Germany surging more than 2 percent. Those markets were up only about 1 percent later.
In another sign of investor skepticism, Spain's borrowing costs rose on the bond market. The yield on Spanish 10-year bonds climbed 0.13 percentage point to 6.32 percent. It had fallen earlier in the day.
The European Union suggested Monday that the money is more than just a loan. Besides being paid back with interest, there will be strings attached for the Spanish government.
"When people lend money, they never do it for free. They want to know what is done with the money," said Joaquin Almunia, the European Competition Commissioner.
Investors are also nervous about Greece, where an election in the coming weekend will help determine whether the country is forced out of the 17-member club of countries that use the euro currency.
And Italy said Monday that its economy contracted by 0.8 percent in the first three months of the year, the worst in three years. That data stepped up the pressure on the Italian government, struggling to fend off the perception that Italy could be next to seek a bailout.
Oil prices rose less than a percent to $84.60 a barrel, while the yield on the benchmark 10-year U.S. Treasury note fell slightly to 1.62 percent, from 1.64 percent on Friday.
Later Monday, all eyes will be on Apple at a developers' conference in San Francisco where CEO Tim Cook is expected to show off new iPhone software. The company is expected to reveal new mapping technology that could bump Google map from its de facto spot on Apple products. The stock was up $6.54, or 1.1 percent, at $586.86.
Other stocks making big moves on Monday:
' Micronetics nearly doubled, up 94 percent, after the maker of microwave and radio frequency components agreed to a takeover by Mercury Computer Systems Inc.
' U.S. Steel fell 3 percent after a large steel maker in China, Baoshan Iron & Steel, said it lowered steel prices as demand from makers of appliances and cars slowed.