European markets closed lower Tuesday, following a global selling spree the day before.
Europe’s major exchanges drifted up in morning trading but by the end of the day London’s FTSE 100 was down 3.1 percent, the CAC 40 lost 1 percent and Frankfurt’s Dax 30 sank 0.5 percent. U.S. markets were mostly steady with the Dow Jones, the S&P 500 and the Nasdaq all within 0.5 percent of the opening numbers by the early afternoon. In Asia, markets were mixed, but mostly lower. Tokyo’s Nikkei average closed down 0.7 percent and the All Ordinaries index in Australia shed 1 percent. In Seoul, the KOSPI gained 0.7 percent, while Hong Kong’s Hang Seng plunged 2.3 percent. Stocks tumbled Monday on Wall Street, with the Dow and S&P falling to 12-year lows. Insurance giant AIG posted a $62 billion fourth-quarter loss, but Monday’s market slide was also down to continuing worries about the financial sector and the economy, said Bill Stone, chief investment strategist at PNC Financial Services. “There are reverberations from AIG and also the continued uncertainty around the financial sector as a whole, which is the chorus that never ends,” he said. “That’s paired with the second chorus that never ends — the weakness of the global economy,” he said. “It’s reflected in the weakness in the industrial, material and energy stocks today.” Investors also remain wary about the various government initiatives to try to stem the recession, announced over the past few weeks, said Mark Travis, president and CEO at Intrepid Capital Funds. They include the newest bank bailout plan, the $787 billion economic stimulus plan and the $75 billion mortgage modification plan. “The administration is hemming and hawing and still not being clear about exactly what they are going to do and how it’s going to work,” he said. U.S. Federal Reserve Chairman Ben Bernanke defended the government’s latest bailout of insurer AIG, telling irate lawmakers that failure to act could have triggered an economic disaster. “We know that failure of major financial firms in a financial crisis can be disastrous for the economy. We really had no choice,” he told senators. Bernanke also said labor market conditions may have worsened in recent weeks. Ford Motor reported Tuesday that sales fell 48 percent in February, kicking off a series of reports expected to show that last month was the worst yet for the auto industry during this recession
The National Association of Realtors released its pending home sales index for January on Tuesday morning. Sales were expected to drop about 3 percent but actually fell 7.7 percent. Peter Orszag, director of the White House Office of Management and Budget, was scheduled to testify before the House Budget Committee about the fiscal 2010 budget.