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US stocks follow European markets lower on concerns about uncertainty in Greece, France
A rising tide of political uncertainty in Europe pushed U.S. stocks sharply lower Tuesday.
Major indexes followed European markets lower as traders wondered how political upheaval in Greece and France will affect the debt crisis there. The Dow Jones industrial average fell 109 points in the first hour of trading.
Rejecting the austerity policies imposed by international lenders, Greek voters on Sunday pushed out parties that had worked with the lenders to secure needed bailouts. Voters elected a slew of splinter parties to parliament, making it more difficult for leaders there to form a majority coalition that can govern effectively.
Greek conservatives said late Monday they were unable to form a government. The next party in line appears just as unlikely to accomplish that feat. Its leader said Tuesday that Greek voters had rejected the cost-slashing policies that lenders are demanding in exchange for keeping Greece afloat.
As another round of elections in Greece appeared more likely, uncertainty gripped European markets. Greek stocks plunged 3.7 percent; losses on other exchanges in the region were more modest. France's main index fell 2 percent, Germany's fell 1.2 percent. The euro also fell against the dollar, trading just below $1.30.
European financial markets have been buffeted for three years by shifting perceptions about the gravity of region's the debt crisis. At times, many feared a messy string of defaults that could set off a global credit crunch. Opponents of strict austerity say that Europe is in a recession that will be hard to combat without more government spending.
French voters on Sunday elected a new president who has spoken out against austerity and promised to cut France's debt load more slowly. Stocks in France fell sharply as many wondered if the new Socialist leader can balance the two priorities without upsetting bond investors or voters.
Stocks recovered from early losses on Monday as traders' knee-jerk reactions to the news from Europe faded away.
That sense of relief evaporated by the time markets opened in New York on Tuesday and traders focused on the political disarray in Greece.
The Dow Jones industrial average fell 105 to 12,904 as of 10:15 a.m. EDT. Only three of the 30 stocks in the Dow rose. Eleven of the 30 fell by a percentage point or more.
The Standard & Poor's 500 index dropped 13 points to 1,356. The Nasdaq composite average lost 33 to 2,925.
Oil continued its week-long slide, falling 1.5 percent on the New York Mercantile Exchange.
Some corporate news that moved stocks:
' Burger chain Wendy's fell 4 percent after it cut its forecast and said its first-quarter profit missed Wall Street analysts' expectations.
' Watchmaker Fossil plunged 33 percent after saying weak sales in Europe caused its first-quarter revenue to fall far short of expectations. The company also lowered its 2012 earnings forecast.
' Casino operator Wynn Resorts reported a disappointing drop in first-quarter earnings, sending its stock down 4 percent.
Daniel Wagner can be reached at www.twitter.com/wagnerreports .