Current Market Update

1:00 pm : Stocks have been under sharp pressure all session. The slide has taken the major equity averages down to their lowest levels in a month.

Concerns about the state of finances among countries in the eurozone periphery returned to the forefront via a downwardly revised outlook for Italy's debt and a downgrade on the debt of Greece during the weekend. Questions about the continent's growth trajectory came into focus after both Germany and France reported marked declines in their monthly PMI Manufacturing readings.

The disappointing data has sent the euro lower. The dollar's response has been a 0.8% climb to it's best level in almost two months.

Sentiment has been soured by the greenback's heady gain and the disappointing data from Europe. In turn, each of the 10 major sectors has fallen to a loss. Only defensive-oriented consumer staples stocks (-0.7%), telecom issues (-0.8%), and utilities (-0.8%) have limited losses to less than 1%.

Amid the market's retreat, volatility has climbed sharply. The Volatility Index is currently up more than 6%, but it had been up even more than that earlier today, when it pushed to 20 for the first time in about two months.

Volatility and selling among stocks has stirred support for Treasuries, such that buying in the benchmark 10-year Note has sent its yield back to its 2011 low near 3.10%. DJ30 -150.38 NASDAQ -45.43 SP500 -17.09 NASDAQ Adv/Vol/Dec 493/939 mln/2081 NYSE Adv/Vol/Dec 503/390 mln/2436

12:30 pm : Weakness among stocks continues to bolster buying interest among Treasuries, although the bounce by Treasuries hasn't been anything dramatic. More specifically, the benchmark 10-year Note is up about a dozen ticks. Still, that's enough to take the yield on the Note back toward its 2011 low.DJ30 -153.56 NASDAQ -48.47 SP500 -17.49 NASDAQ Adv/Vol/Dec 428/857 mln/2125 NYSE Adv/Vol/Dec 490/355 mln/2428

12:00 pm : Europe's major bourses are now closed for the day. Losses were steep -- Britain's FTSE fell to a 1.6% loss; Germany's DAX dropped 1.8%; France's CAC closed 1.8% lower; Spain's IBEX sank 1.4%, and; Portugal's PSI gave up 0.4%. Weakness in Europe was largely owed to disappointing data in the latest round of PMI Manufacturing readings. Fiscal concerns also continue to weigh on sentiment there.

Weakness abroad has imbued the bias of domestic traders. As such, stocks have spent the entire session trading with marked declines, which have culminated in losses of more than 1% for the major equity averages. DJ30 -162.26 NASDAQ -48.49 SP500 -18.27 NASDAQ Adv/Vol/Dec 422/760 mln/2109 NYSE Adv/Vol/Dec 490/314 mln/2412

11:30 am : Consumer staples and utilities stocks have managed to limit their losses this session to less than 1%, but only barely. They are down 0.8% and 0.9%, respectively.

The two sectors have been helped by their defensive posture. Procter & Gamble (PG 67.16, -0.20) has been a source of support for the consumer staples sector while Dean Foods (DF 13.53, +0.17) has actually put together a gain. Although Edison International (EIX 39.77, +0.05) is the only name in the sector that is currently in higher ground, the rest of the space has successfully contained losses. DJ30 -157.46 NASDAQ -47.85 SP500 -17.75 NASDAQ Adv/Vol/Dec 434/645 mln/2085 NYSE Adv/Vol/Dec 490/265 mln/2366

11:00 am : Steady pressure has left stocks to continue to slog along near their session lows. Corresponding selling interest has stoked volatility, such that the Volatility Index is up 6% so that it is back near its monthly high.

The dollar recently eased back a bit, but it has since regathered upward momentum. It is now back to sporting a 0.8% gain. DJ30 -142.47 NASDAQ -45.44 SP500 -16.03 NASDAQ Adv/Vol/Dec 398/528 mln/2083 NYSE Adv/Vol/Dec 485/218 mln/2363

10:35 am : Strength in the dollar index, which is currently up 0.6%, has caused selling pressure in the majority of the commodity complex this morning with crude oil and copper two of the worst performers.

Crude oil futures have been in the red all morning. Crude hit new session lows of $96.64 five minutes after pit trading began and is now trading near its 50-day moving average at $97.53/barrel, down 2.6%.

Natural gas is one of a few commodities trading higher and is currently the best performing commodity so far in today's session. The energy component has been in positive territory since around 7:00am EST and is now up 2.8% at $4.41/MMBtu.

Precious metals are in positive territory again, but just showing modest gains. About 40 minutes ago, both precious metals gained steam. This pushed gold into positive territory and it's remained there since, now at $1514.60 per ounce, up 0.4%. Silver just moves back into positive territory and is now up 0.1% at $35.13 per ounce.

Overnight, agriculture commodities traded lower with wheat showing declines of 11 cents (or 1.4%) at $7.96/bu, soybeans fell 7 cents to $13.73/bu, while corn fell less than 1 cent (-0.07%), keeping it at $7.59/bu. Pit trading in the grains just began a couple of min ago and corn is + 6 cents at $7.65/bu, wheat is -7 cents at $7.99/bu and soybeans are -6 at $13.74/bu.DJ30 -145.61 NASDAQ -49.98 SP500 -15.94 NASDAQ Adv/Vol/Dec 365/349.9 mln/2074 NYSE Adv/Vol/Dec 421/156.0 mln/2379

10:00 am : Declining issues currently outnumber advancers by about 8-to-1 on the NYSE. Gold stocks like Newmont Mining (NEM 55.12, +1.04) and its peer Barrick Gold (ABX 45.82, +0.22) are among the few that have attracted support.

Gold stocks have been helped by a 0.3% gain in the price of the physical metal, which was last quoted at $1513 per ounce. Gold's gain comes in the face of a stronger dollar, which is currently off of its morning high, but it continues to sport a strong gain of 0.6% against a basket of major foreign currencies.

Advancing Sectors: (None)
Declining Sectors: Consumer Staples (-0.4%), Utilities (-0.6%), Financials (-0.8%), Health Care (-0.9%), Consumer Discretionary (-1.0%), Telecom (-1.0%), Materials (-1.3%), Energy (-1.5%), Industrials (-1.6%), Tech (-1.6%)DJ30 -136.76 NASDAQ -47.88 SP500 -15.67 NASDAQ Adv/Vol/Dec 305/162 mln/2075 NYSE Adv/Vol/Dec 318/94 mln/2434

09:45 am : Stocks are down sharply in the first few minutes of trade. The slide has taken each of the major equity averages to its lowest level in a month.

The stock market's weakness is largely due to the dollar's advance against competing currencies. In fact, the Dollar Index is up 0.7%, which puts it at its best level in almost two months.

Consumer staples stocks have done the best job of limiting their losses. The sector is down only 0.5%. In contrast, industrial stocks are collectively down by 1.5%, which makes them this morning's worst performing sector. DJ30 -138.72 NASDAQ -45.66 SP500 -15.88 NASDAQ Adv/Vol/Dec 251/55 mln/2079 NYSE Adv/Vol/Dec 240/50 mln/2113

09:15 am : S&P futures vs fair value: -16.00. Nasdaq futures vs fair value: -30.30. Stock futures point to a sharply lower start to the new week. The negative bias comes as the dollar stages a strong gain and concerted selling interest takes hold of the major foreign markets following some disappointing data. Many commodities have also been clipped in the wake of the greenback's gain, which currently stands at 0.8%, relative to a basket of major foreign currencies. Premarket participants have been without corporate news and domestic data, so there hasn't been anything to improve the mood ahead of the open. However, that has helped safety plays like Treasuries. Gold is currently clinging to a fractional gain while most of the commodities complex comes under a bout of selling pressure.

09:05 am : S&P futures vs fair value: -15.70. Nasdaq futures vs fair value: -29.30. Strength in the dollar, which was last quoted with a 0.8% gain against a basket of major foreign currencies, has put pressure on many commodities. In turn, the CRB Commodity Index is down 1.3%. Crude oil is under some of the most pressure -- it is down 3.1% to $97.00 per barrel in the first few minutes of pit trade. Natural gas prices are up a heady 1.0% to $4.33 per MMBtu, however. Meanwhile, gold prices are up 0.2% to $1511 per ounce. The yellow metal has been helped by interest in safety, although its price is off of its morning high near $1513 per ounce. Silver prices have fallen 1.2% to $34.68 per ounce.

08:35 am : S&P futures vs fair value: -15.20. Nasdaq futures vs fair value: -29.10. Disappointing data from the eurozone has the region's bourses under sharp pressure. As such, Germany's DAX is down a dramatic 2.0%. Weakness is widespread in the wake of news that the country's Manufacturing PMI for May fell to 58.2 from 62.0 in the prior month while its Services PMI fell to 54.9 for May from 56.8 in April. Banking plays Deutsche Bank (DB) and Commerzbank have been among the heaviest drags on trade. France's CAC is also down 2.0%. All 40 components are under pressure; what's more, not one of them is trading with a loss of less than 1%. Losses on the order of 4% have made Credit Agricole and Alcatel-Lucent (ALU) the two worst performers. Such sharp selling has come mostly in response to news that France's Manufacturing PMI fell to 55.0 for May from 57.5 in April. Meanwhile, its Services PMI for May eased down to 62.8 from 62.9 for the prior month. Britain's FTSE is off by 1.7%. Losses are also broad there, but natural resource plays are suffering some of the sharpest declines. As for action in the eurozone's periphery, Spain's IBEX is down 1.4%, but Italy's MIB is off by 3.3%. Italy's debt rating outlook was downgraded by analysts at S&P during the weekend. Greece's Athex 20 has given up 0.7% after its debt was downgraded by analysts at Fitch.

Overnight trade in Asia was also weak. As such, Japan's Nikkei dropped to a 1.5% loss. Tokyo Electric Power was, once again, one of the worst performers. Sony (SNE) suffered only a relatively modest loss, but the after the close the company reduced its forecast. It was also recently learned that Warner Music Group (WMG) rejected the takeover offer made by Sony. As for economic data, Japan's final reading for its March Leading Index hit 100.1, which is up slightly from the preliminary reading of 99.5. Hong Kong's Hang Seng was sent to a 2.1% loss. Mainland China's Shanghai Composite tumbled 2.9% for its worst single-session drop in several months. Selling interest in China was partially fueled by a multi-month low in the country's HSBC PMI, which came in at 51.1 for May. Pressure also came in response to renewed strength in the dollar, which is at its best level in nearly two months. Most of the greenback's recent gains have come against the euro.

08:05 am : S&P futures vs fair value: -15.50. Nasdaq futures vs fair value: -29.30. Concerted selling abroad has carried over into premarket trade. The negative tone takes root in some disappointing eurozone data, namely marked drops in manufacturing PMI for Germany, France, and the broader eurozone during May. Also weighing on sentiment are ongoing concerns about the fiscal health of countries in the eurozone periphery, like Italy, which had its outlook downgraded during the weekend by analysts at S&P. The euro has also been hurt by the headlines. In turn, the dollar has made a strong climb, which has exacerbated premarket weakness. Nothing is on the economic calendar for today.

06:50 am : [BRIEFING.COM] S&P futures vs fair value: -15.50. Nasdaq futures vs fair value: -29.30.

06:50 am : Nikkei...9460.63...-146.50...-1.50%. Hang Seng...22711.02...-488.40...-2.10%.

06:50 am : FTSE...5855.94...-92.60...-1.60%. DAX...7137.30...-129.50...-1.80%.

Top Stories: US stocks plunge on European debt worries

FILE - In this file photo taken May 2, 2011, trader Christopher Forbes works on the floor of the New York Stock Exchange. Heightened tensions over Europe's debt crisis combined with weak economic surveys to send world stock markets sliding on Monday, May 23, 2011,with the euro dropping below $1.40 for the first time in two months. (AP Photo/Richard Drew, file)

US stock markets sharply lower amid growing European debt worries.

NEW YORK (AP) -- With little economic news coming out of the United States, Wall Street is panicking about Europe.

Stocks sank in midday trading Monday after warnings about the finances of several European countries stoked fears that the region's debt crisis is worsening. The euro dipped briefly to its lowest level against the dollar in two months.

The Dow Jones industrial average fell 173 points, or 1.4 percent, to 12,338 in midday trading. Stocks also fell broadly in Europe and Asia.

The Standard & Poor's 500 index fell 20, or 1.5 percent, to 1,313. The Nasdaq composite index fell 52, or 1.8 percent, to 2,751.

Italy is the latest European country to be affected by the region's widespread debt problems. Standard & Poor's said Saturday that country was in danger of having its debt rating lowered if it could not reduce its public borrowing and improve economic growth.

The ratings agency lowered its outlook for Italy's debt to negative from stable. That means there is a one-in-three chance that S&P would downgrade Italy's debt rating in the next two years.

Fitch and Moody's, the other two main ratings agencies, have said they see no reason to alter their outlook for Italy's debt, which they say is stable. The S&P warning was enough to rattle European markets and cause investors to worry that Italy could join Greece, Portugal and Ireland on the list of countries with serious debt problems.

Financial markets in Europe closed sharply lower Monday. The FTSE 100 index of leading British shares fell 1.9 percent. Germany's DAX lost 2 percent. The CAC-40 in France was 2 percent lower.

Spain's public finances are also worrying investors. Spain's ruling Socialist party was roundly defeated in local elections, raising concerns that political instability would keep that country from enforcing spending cuts. The Ibex 35 index on the Madrid stock market fell nearly 2.

Concerns about the ability of the Spanish and Italian governments to control their debt come after a Friday debt downgrade for Greece that gave investors more reason to fear that country would need more help managing its debts following a $157 billion loan package it received last year.

The European Union's top financial official urged Greece on Monday to sell more of the country's holdings to give the market more faith that it is getting its debt under control.

The 10-year U.S. Treasury yield fell to 3.10 percent, its lowest level this year. Bond yields fall when prices go up, so the drop is a sign that investors are clamoring for the safety of long-term U.S. debt.

Downgrades of European sovereign debt can shock world markets when they're first announced. Recently, debt downgrades have had a short-term effect. Moody's downgraded Spain's on March 10. The Ibex 35 sank 1.3 percent on the news, but recovered its losses within days.

S&P downgraded their debt outlook for the U.S. on April 17 from stable to negative, saying it could lower the country's debt rating in the future. The warning blindsided markets, sending the Dow down 240 points in the morning. But it recovered the next day.

Another consequence of European debt problems: The dollar is up 0.8 percent against an index of currencies. A stronger dollar makes U.S. products more expensive to other countries, and can hurt U.S. companies still recovering from the recession.

While stocks are reacting strongly to the weekend's headlines, corporate debt yields are not dropping any more than government debt yields. If that were the case, it would signal that investors were growing more wary of risk. Because they're not, the U.S. economy still hasn't suffered damage, said Jack Ablin, chief investment officer at Harris Private Bank.

"There's a short term perception of risk, but I'm not viewing it as necessarily lasting," said Ablin.

Later this week, investors will get U.S. economic data to consider. The Commerce Department will report Tuesday on the number of new homes that were sold in April, helping investors gauge the state of the housing recession.

On Thursday, the Commerce Department will release its revised estimate for how much the economy grew in the first quarter. The GDP number is expected to be revised upward from its initial 1.8 percent. Investors will be watching to see how much the rising cost of oil and raw materials has hampered spending by corporations and consumers.

On Friday, the Commerce Department's report on personal income and spending in April will help investors gauge how pricier gas has affected how much families spend on other things.

By: Francesca Levy, AP Business Writer, On Monday May 23, 2011.