US stock markets ended on Friday awash in yet more red ink, with a seemingly endless stream of bad news from Europe pushing markets to what analysts said was their worst-ever Thanksgiving week.
The Dow Jones Industrial Average fell 25.77 points, or 0.23 percent, in Friday’s holiday-shortened session to end the week at 11,231.78, a loss of 4.8 percent for the week.
“The latest fiscal drama out of Europe tipped the scales in the bears’ favor,” Andrea Kramer of Schaeffer’s said.
The broader S&P 500 and the tech-heavy NASDAQ also closed down.
“Today’s slide caps off the worst Thanksgiving week ever for stocks as the S&P 500 tumbled 4.7 percent,” analysts at Briefing.com said.
The week began badly, with markets tanking Monday on news that the US Congress failed to reach a deal to cut the country’s massive budget deficit and to extend stimulus measures into next year.
On Tuesday, a sharp downward revision to US growth figures to 2 percent from 2.5 percent squeezed confidence further.
However, it was events on the other side of the Atlantic that set the tone.
On Wednesday, a poor German debt auction fueled fears that Europe’s fiscal crisis was spreading to the very core of the continent.
US markets were closed on Thursday to mark the Thanksgiving holiday, but after reopening on Friday, the weeklong fall resumed.
A brief morning rally gave way amid news of a poor Italian bond auction that provided the latest twist in Europe’s long-running debt crisis.
Italy had to pay record rates to raise 10 billion euros (US$13.2 billion), sparking more share selling.
The country was forced to pay a rate of 6.5 percent on bonds due in six months and of 7.81 percent on bonds due in two years — dangerous levels that analysts say could make Italy insolvent within months.
There was more bad news from Hungary.
Moody’s on Thursday downgraded Hungary’s government bonds by a notch to “Ba1” with a negative outlook, the ratings firm said.
Another ratings agency, Standard & Poor’s, downgraded Belgium’s rating.
On Friday, the S&P 500 fell 3.12 points, or 0.27 percent, to 1,158.67, while the tech-rich NASDAQ fell 18.57 points, or 0.75 percent, to 2,441.51.
The US bond market weakened.
The interest rate paid on 10-year US debt rose to 1.96 percent from 1.88 percent late on Wednesday.
The 30-year rate was 2.92 percent versus 2.91
Next week, attention could shift back to the US, with the release of unemployment data on Friday.
However, a stream of European bond auctions could keep Europe at center stage.
“Italy and Spain will be faced with another set of critical bond auctions over the coming week, in a very risk-averse and illiquid environment,” Barclays Capital analysts said.
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