NEW YORK (AP) — Stocks fell Thursday as worries about the soundness of a European bank spooked U.S. investors, prompting them to sell stocks and snap up less risky assets like gold and governments bonds.
Fears emerged overnight about the financial stability of Espirito Santo International, a holding company that is the largest shareholder in a group of firms, including the parent of Portugal's largest bank, Banco Espirito Santo.
Espirito Santo International reportedly missed a debt payment this week and was cited for accounting irregularities — similar to issues that sparked Europe's debt crisis four years ago. The bank troubles had traders and investors talking about another European debt crisis.
Thursday's stock selling started in Europe, and spread to the U.S, where the Dow Jones industrial average plunged as much as 180 points within the first half hour of trading.
But anxiety in the U.S. quickly subsided and the market clawed back in afternoon trading. While the market never fully bounced back, the decline in the Dow was roughly half of what it was at the beginning of the session.
"Today's news did reignite some of those contagion fears," said Ryan Larson, head of equity trading for RBC Global Asset Management.
Portugal is one of the smaller eurozone economies and, like Greece and Ireland, needed an international rescue in 2011 during the continent's debt crisis. A three-year economic recovery program was supposed to have straightened out its finances.
That debt crisis in Europe was largely responsible for the U.S. stock market's last decline of 10 percent or more, known as a "correction" in Wall Street parlance. Investors back then worried that the crisis would spread to the U.S., which was starting to recover from its own financial trauma.
On Thursday, the Dow fell 70.54 points, or 0.4 percent, to 16,915.07, erasing most of Wednesday's advance.
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