Tech sell-off, Greece worries hit stocks

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NEW YORK (CNNMoney) — Tech shares led a broad sell-off on Wall Street Wednesday, following disappointing earnings, sales and outlook from Dell.

Worries about Greece leaving the eurozone added to the pessimism, sending stocks down 1.3%.

“The Dell news sent some fears through the tech sector,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management. “The concern is that this goes beyond just Dell. We saw similar news out of Cisco recently.”

Dell (DELL, Fortune 500) shares plunged more than 18% in heavy trading, wiping out all of its gains for the year. Dow components Microsoft (MSFT, Fortune 500) and Intel (INTL, Fortune 500) were both down nearly 3% while Cisco (CSCO, Fortune 500) was down about 1% and shares of Hewlett-Packard (HPQ, Fortune 500), due to report results after the close, fell nearly 5%

Investors are also keeping close tabs on Facebook (FB) and the unfolding saga there. Three investors sued Facebook and CEO Mark Zuckerberg Wednesday, along with lead underwriter Morgan Stanley (MS, Fortune 500) and others, accusing them of withholding negative information ahead of company’s initial public offering.

Shares of Facebook, which lost 18% from its IPO price in the first two days of trading this week, rebounded about 2%. It was higher in earlier trading, pulling back when the investor lawsuit became public.

Michael Sheldon, chief market strategist at RDM Financial Group, said the weakness in technology stocks is signaling broader worries about the economy.

“Investors are somewhat unsure of the direction of the economy,” he said. “When there’s doubt, investors run.”

The Dow Jones industrial average (INDU) tumbled 148 points, or 1.2%, pushing 28 of the 30 stocks in the blue-chip index lower. Only Wal-Mart (WMT, Fortune 500) and Coca-Cola (KO, Fortune 500) were marginally higher.

The tech-heavy Nasdaq (COMP) shed 28 points, or 1%. The SP 500 (SPX) slid 15 points, which also put it down 1%.

European leaders were meeting in an ad hoc summit to address the latest problems with sovereign debt. The meeting is occurring amid growing worries that Greece is moving closer to dropping the euro, and about what the contagion effects an exit might have on other economies.

Former Greek prime minister Lucas Papademos told Dow Jones Newswires late Tuesday that Greece is considering preparations to leave the eurozone.

“I think the biggest issue for U.S. markets remains the story in Europe,” said Sheldon. “Does Greece pull out of the eurozone and what kind of contagion does that cause?”

On the domestic front, weak earnings, sales and guidance from Dell late Tuesday sparked the sharp sell-off in its shares. Rival Hewlett Packard, which is widely expected to announce mass layoffs when it reports what is forecast to be lower sales and earnings, was among the bigger losers in the tech sector after Dell.

U.S. stocks ended flat Tuesday, turning lower during the final hour of trading on reports about Greece’s preparations to leave the eurozone.

World markets: European stocks closed sharply lower. Britain’s FTSE 100 (UKX) lost 2.5%, while the DAX (DAX) in Germany fell 2.3%. France’s CAC 40 (CAC40) tumbled 2.6%.

The World Bank cut its growth estimates for growth in the Asia-Pacific region, including China. It now forecasts a growth of 7.6% this year — down from 8.2% in 2011, and 10% as recently as 2010.

Asian markets ended lower following the World Bank’s cut of growth forecasts. The Shanghai Composite (SHCOMP) slipped 0.4%, while the Hang Seng (HSI) in Hong Kong lost 1.3% and Japan’s Nikkei (N225) tumbled nearly 2%.

Companies: Automaker Ford Motor (F, Fortune 500) had its debt upgraded out of junk bond status by Moody’s late Tuesday — an important benchmark for the automaker that will lower its borrowing costs, and allow it to reclaim collateral it put up for a credit line. Shares gained in active trading, as did those of rival General Motors (GM, Fortune 500), which is awaiting its own upgrade to investment grade.

Homebuilder Toll Brothers (TOL) reported better-than-expected earnings and revenue that was in line with forecasts before the market open Wednesday. It also upped its guidance for the second quarter.

Shares of Hormel (HRL, Fortune 500) edged higher after the meat processor reported a better-than-expected gain in earnings before the open.

Financial stocks were under pressure early Wednesday, as Morgan Stanley leading the way lower with a 3.3% loss. But shares of JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Bank of America (BAC, Fortune 500) down at least 1%, while Citigroup (C, Fortune 500) shed 2.5%.

Economy: New-home sales rose more than expected in April to an annual pace of 343,000, up from 332,000 in March. The report follows a strong report on sales of existing homes Tuesday, in which sales climbed 10%.

Currencies and commodities: The dollar rose to its highest level in nearly two years against the euro. The greenback also edged higher versus the British pound, but lost ground against the Japanese yen.

Oil for July delivery slipped $1.95, or 2.1%, to $89.90 a barrel, the first time since November that it has fallen below the $90 benchmark. Officials from six world powers are due to hold talks with Iran in Baghdad on Wednesday about its nuclear program, raising hopes that there might be an deal that would end sanctions against Iran.

Gold futures for June delivery tumbled $28.20, or 1.8%, to $1,548.40 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury moved slightly higher, knocking the yield down to 1.72% from 1.79% Tuesday. To top of page


German travel firms says Greece bookings plunge


FRANKFURT |
Tue May 22, 2012 10:49am EDT

FRANKFURT (Reuters) – There was more bad news for beleaguered Greece on Tuesday, as two more German travel firms said they were seeing a 30 percent plunge in bookings to the Mediterranean nation.

Reports of animosity and even violence towards Germans over the hard austerity measures demanded by Chancellor Angela Merkel in return for bailouts, as well as fears of strikes, are keeping the world’s biggest spenders on foreign holidays away from Greece.

Air Berlin (AB1.DE), Germany’s second largest airline, and Rewe, the retail and tourism group both said on Tuesday that bookings to Greece were around 30 percent below that of last year.

Tourism is a vital source of income for Greece, accounting for about a fifth of gross domestic product.

“Greece is doing very badly, just like North Africa,” Air Berlin Chief Executive Hartmut Mehdorn said.

Rewe Tourism chief Norbert Fiebig said Germans were instead choosing to travel to other places like Turkey, echoing comments from Thomas Cook Germany (TCG.L), which has said Spain is also proving a popular alternative.

Other travel groups like TUI AG (TUIGn.DE) (TT.L) and Thomas Cook’s Germany-based airline Condor have already announced offers and discounts to try to stem the fall in bookings.

(Reporting by Gernot Heller and Matthias Inverardi; writing by Victoria Bryan; Editing by Will Waterman)


‘Greece open for business’, say tourism bosses as German travellers report hostility

By
Travelmail Reporter

06:13 EST, 23 May 2012

|

10:15 EST, 23 May 2012

The Greek tourism association has issued a statement to reassure travellers that their holidays are safe, despite predictions that the country could be about to leave the euro.

The Association of Greek Tourism Enterprises (SETE) claimed that 80 per cent of citizens were actually in favour of the country remaining part of the eurozone and said now was the perfect time to visit the Mediterranean holiday destination.

However, the reassurance may have come too late for some holidaymakers, with German travel firms reporting a 30 per cent drop in bookings for Greece after claims of some Germans being subjected to animosity and even violence in the country.

Over view of smugglers cove outside Argassi in Greece

Business as usual: Greece has reassured worried holidaymakers that their summer travel plans are safe

Reports of clashes over the hard austerity measures demanded by Chancellor Angela Merkel in return for bailouts are keeping the world’s biggest spenders on foreign holidays away from Greece.

Air Berlin, Germany’s second largest airline, and Rewe, the retail and tourism group both said on Tuesday that bookings to Greece were around 30 percent below that of last year.

‘Greece is doing very badly, just like North Africa,’ Air Berlin chief executive Hartmut Mehdorn said.

In contrast, Travelzoo in the UK said it had seen an upsurge in bookings for all-inclusive holidays to Greece, despite a dip in people booking flights to the country.

British travellers are said to be snapping up packages that are discounted by up to 60 per cent, prompting an increase in booking by a third.

The holidaymakers can organise their trips safe in the knowledge that a tour operator has to protect them in the event anything goes wrong.

In contrast, the number of people booking flights to Greece and organising their own accommodation has dropped by 25 per cent, as if the holiday is disrupted there is minimal support for travellers.

SETE highlighted that the strong pound means British holidaymakers can enjoy the best exchange rate since 2008 and said many hotels and apartments are offering good deals.

It also said that even if the much-debated currency change does happen, Greek banks are solvent and have a guaranteed solvency by the European Central Bank which means that any holidaymakers caught up in the switch would be able to make financial transactions as usual.

Dr. Andreas Andreadis, president of SETE said: ‘We are trying to change the way our country and its economy is run, however, this is not going to affect the quality of a holiday. Greece remains one of the top destinations in the world and we reassure holidaymakers that this summer remains business as usual.’

Holiday companies have also reassured Britons that they are keeping a close eye on the situation in Greece, with the likes of TUI – which owns Thomson and First Choice – saying it had ‘contingency plans in place’.