By Anora Mahmudova and Sara Sjolin, MarketWatch
U.S. stocks clawed back much of their early losses Monday as
investors bet that the decisive outcome of the Greek referendum
will force the country's lenders to find a compromise and keep
Greece in the eurozone.
The S&P 500 was down 5 points, or 0.2% to 2,071. The Dow
Jones Industrial Average dropped 50 points, or 0.3%, to 17,682. The
Nasdaq Composite fell 12 points, or 0.2% at 4,997.
The declines tracked losses on the European stock markets
(http://www.marketwatch.com/story/european-stocks-knocked-down-as-greek-voters-say-no-to-creditors-demands-2015-07-06),
where the Stoxx Europe 600 index fell 1.2% to 378.68 and Germany's
DAX 30 index tumbled 1.6% to 10,879. Asian shares also mostly
slumped
(http://www.marketwatch.com/story/china-shares-rise-after-beijings-weekend-rescue-2015-07-05).
JJ Kinahan, chief strategist at TD Ameritrade, noted that Greece
story is far from over.
"I believe people are realizing that it's in everybody's best
interest to keep Greece in the eurozone. But the referendum forces
financial discipline on someone," Kinahan said.
"We expect volatility to stay higher than usual, however, as
there are still lots of uncertainties besides Greece, namely Puerto
Rico's debt problems and earnings for the second quarter," he
added.
Greece's rejection of austerity: The global selloff came after
more than 61% of Greeks voted "no"
(http://www.marketwatch.com/story/in-rebuke-to-europe-greeks-vote-resounding-no-to-bailout-terms-2015-07-05)
in Sunday's referendum on austerity measures put forward by the
International Monetary Fund and the eurozone as terms for further
bailout aid. The Alexis Tsipras-led government will now try to
renegotiate a new bailout package with the lenders, but economists
fear the lenders are unwilling to accept looser reforms, raising
concerns that Greece will exit the euro.
"The outcome of the Greek referendum has significantly increased
the risk of Greece leaving the eurozone, which is now by far the
most likely outcome," said Erik Nielsen, global chief economist at
UniCredit, in a note. "The process may start within days or weeks,
but it won't be a smooth ride into a new currency. It'll be chaos
with political ramifications."
Christine Lagarde, the International Monetary Fund chief, said
the agency stands ready to assist Greece. The IMF is one of
Greece's three creditors, and the country missed a payment to it at
the end of last month.
Follow the latest on the Greek debt crisis here
(http://www.marketwatch.com/story/greek-debt-crisis-latest-news-2015-06-29)
The euro was hit hard by the developments
(http://www.marketwatch.com/story/euro-falls-against-rivals-as-greek-voters-reject-austerity-demands-2015-07-06)
in Greece, changing hands at $1.1032, down from $1.1115 late Friday
in New York. The shared currency traded as low as $1.0952 earlier
Monday, according to FactSet.
Greece's stock market and the Athex Composite remained closed
after being shut last week. The country's banks also stayed closed.
The Global X FTSE Greece 20 ETF (GREK) traded, however, and tumbled
9.7%.
Company news: Shares of Aetna Inc. (AET) skidded 7.1% after the
health insurer on Friday said it would buy Humana Inc
(http://www.marketwatch.com/story/aetna-to-buy-humana-in-37-billion-merger-deal-2015-07-03).(HUM)
for $37 billion, after weeks of merger talks. Humana shares rose
0.7%.
For more on today's notable movers read Movers & Shakers
column
(http://www.marketwatch.com/story/a-schulman-dollar-tree-tesla-shares-in-focus-2015-07-06).
Other markets:Crude oil
(http://www.marketwatch.com/story/oil-tumbles-4-after-greek-voters-reject-creditors-reform-proposal-2015-07-06)
plunged 5% to $54.02 a barrel ahead of the Tuesday deadline over
nuclear deal with Iran. Gold futures
(http://www.marketwatch.com/story/gold-little-changed-as-fed-trumps-greek-drama-2015-07-06)
were ticked higher to $1.166.20 an ounce.
The dollar traded mostly higher against other major currencies,
with the ICE dollar index up 0.1% at 96.22.
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