Stocks fall in advance of Greek confidence vote

Dow Jones: 11,983.24 (–61.23) Nasdaq: 2,686.15 (–11.82) S&P 500: 1,253.23 (–7.92)US STOCKS fell yesterday, ending four weeks of back to back gains, as political instability resurfaced in Europe and investors braced for a confidence vote in Greece after US markets close.

The vote on Greek prime minister George Papandreou leaves the fate of a $130 billion bailout deal hanging in the balance. Investors are once more chewing over worst-case scenarios after markets were again engulfed by volatility less than a week after a framework solution to Greece’s woes had been agreed.

The problem for investors is that any result of the confidence vote is unlikely to end the uncertainty hanging over Greece and the euro zone. Instead, it will probably begin a protracted political and diplomatic process.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, who met economists in Athens, said he believes Greece is on a slow, painful road to abandoning the euro, an outcome that could bring months of uncertainty.

As the Group of 20 industrialised nations met, Germany made little progress convincing other countries to contribute to the European rescue fund.

The Dow Jones industrial average dropped 61.23 points, or 0.51 per cent, to 11,983.24.

Shares of Jefferies lost as much as 7.4 per cent after a brokerage cut Jefferies target price but said it was being “unjustly punished” over the European debt crisis. To quell speculation, Jefferies said it has no meaningful credit risk to Portugal, Italy, Ireland, Greece and Spain. The shares recovered to end up 0.5 per cent at $12.07 after losing nearly 20 per cent this week.

Genworth Financial surged 17 per cent, the most in the SP 500, to $7.19.

Starbucks rallied 6.7 per cent to $44.19. The world’s largest coffee-shop operator said fourth-quarter profit rose 29 per cent as US sales increased.

Groupon, trading under the symbol GRPN, soared 31 per cent to $26.11. It surged as much as 56 per cent earlier.

A Labor Department report showed the US unemployment rate hit a six-month low in October and job gains in the previous two months were stronger than previously thought, pointing to some improvement in the labour market. – (Reuters/ Bloomberg)