US stocks traded lower on mounting concerns that Greece would default on its debt and be the first county to exit the Euro zone after it emerged that Greece’s Euro zone partners had refused to extend the debt ridden country’s bailout program.
The Dow Jones Industrial Average most recently dropped 200.09 points or 1.12%, its highest intraday decline in more than a month, to trade at 17,728.74 points with about 28 of its 30 members trading lower.
The benchmark S&P 500 Index most recently dropped 24.07 points or 1.13% at 2076.27 with all 10 if its key sectors trading lower
The technology heavy Nasdaq Composite most recently slipped 68 points or 1.34% to trade at 5008.03 points.
“Nobody really expected the situation to be as dramatic as it is,” Rebecca O’Keeffe, head of investment at Interactive Investor, told the Wall Street Journal.
“The prospect of Greece exiting the European Union has increased significantly.”
Negotiations between Greece and its international lenders broke down over the weekend after the country’s Prime Minister Unexpectedly called for a referendum on whether or not to accept the austerity measures demanded for the country’s lenders.
The vote was approved by the country’s parliament and will be held this Saturday.
European Lenders refused to extend the country’s bailout program which expires Tuesday prompting Greece to announce limits on cash transfers and withdrawals.
“A week ago, it seemed very likely that we were close to having a resolution, and now all of a sudden we’re waking up to capital controls?” Leo Grohowski, who oversees about $194 billion in client assets as chief investment officer at BNY Mellon Wealth Management in New York, told Reuters.
“I’m not confident that today reflects all the bad news that could happen. Investors are really bumping up the odds that Greece will exit the euro.”
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