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Wall Street unimpressed by Spain bailout

(Xinhua)

09:23, June 12, 2012

NEW YORK, June 11 (Xinhua) -- U.S. stocks retreated on Monday and closed at session lows following a short rally as enthusiasm about the Spanish bank aid package faded.

When the market closed, the Dow Jones industrial average fell 142.97 points, or 1.14 percent, to 12,411.23. The Standard & Poor' s 500 was down 16.73 points, or 1.26 percent, to 1,308.93. The Nasdaq Composite Index dropped 48.69 points, or 1.70 percent, to 2, 809.73.

The blue-chip Dow gained nearly 100 points in early trading after the European Union decided to lend Spain as much as 100 billion euros (126 billion U.S. dollars) to rescue its banking system. The size of aid package was larger than previously expected and initially spurred a relief rally in equity markets around the world.

However, enthusiasm soon faded amid concern about the details of the bailout and skepticism that any fundamental issues could really be solved.

"It just kicked the can down the road. It doesn't really solve the fundamental economic problems, not only in Spain, but in anywhere else," said Kenneth Polcari, managing director of ICAP Equities. "That's the same story we've seen with Spain, Greece, Portugal and Ireland. They gave all these countries money and nobody was dealing the structural problems," he added.

Meanwhile, the upcoming Greece election also kept a lid on the market. If the party against the current austerity plan wins the voters, the debt-ridden country may have to exit from the euro zone and cause more turbulence in the global financial markets.

"If the leader of leftist party wins, I think Greece will ultimately end up with exiting the euro zone, and it will be kind of ugly," said Polcari.

"The market is very nervous right now. I do think as the week moves on, as we get close to Sunday, there will be speculations about what the polls are saying, who the winner will be. Then you' ll see the market trying to position itself to what it thinks gonna happen on Sunday," he added.

Apart from all the uncertainties about Europe, Apple added pressure to the market as the legendary company failed to impress investors with its new products.

Apple stocks fell 1.58 percent to close at 571.17 dollars per share after it unveiled a new operating system for the iPhone, a thinner MacBook Pro laptop and other products at a conference for software developers in San Francisco.

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