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U.S. oil slips 7%, stocks trim losses amid Greece drama

U.S. oil slips 7%, stocks trim losses amid Greece drama

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U.S. oil slips 7%, stocks trim losses amid Greece drama

Global markets deepened losses Monday after voters in Greece rejected austerity plans demanded by international creditors, casting doubt on the country’s future in the euro zone.

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As the standoff between Greece and international creditors continues, the US market reacted in a big way Monday morning. But early losses gave way to an afternoon comeback. Editor in Chief David Callaway says that investors must be willing to ride

Stocks fell Monday but ended off early lows as investors expressed concerned over Greece’s volatile debt crisis but did not go into panic mode.

U.S. crude plunged $ 4.16, or 7.3%, to $ 52.77 a barrel.

Benchmarks tumbled at the open — the Dow Jones industrial average as much as 1666 points — after voters in Greece rejected austerity plans demanded by international creditors. The move cast doubts on the country’s future in the eurozone.

The Dow ended down 47 points, or 0.3%, to 17,683.58. The S&P 500 and Nasdaq composite slipped 0.4% and 0.3%, respectively.

The early declines in the U.S. stock market following the “no” vote in Greece were not as sizable as some pundits predicted and Wall Street pros said there was no signs of panic in markets.

Athens’ stock market remains closed amid the turmoil. An exchange traded fund that tracks Greek shares, the Global X FTSE Greece 20 ETF (GREK), was down more than 8%.

“There’s been no panic of any kind,” Paul Hickey, co-founder of Bespoke Investment Group told clients. “The market remains faithful that the European Central Bank and other European institutions have done an adequate job firewalling the eurozone against Greece.”

Investors, at least so far, are behaving as if they do not fear financial contagion from the Greek crisis, unlike the financial infection that spread globally after Wall Street bank Lehman Brothers filed for bankruptcy back in the fall of 2008.

“The week ahead will be dominated by Greece and the implications of the landslide ‘No’ vote,” says David Kelly, chief global strategist at JPMorgan Funds, adding that he expects difficult negotiations ahead between the two parties.

Kelly summarizes what investors are watching: “For global investors, the bigger question will continue to be whether any economic, financial or political ripple effect is likely to emerge from the crisis. As of right now, the answer still appears to be no.”

Investors also remain cautiously optimistic a deal gets done, albeit late.

“I still expect a compromise,” says Don Luskin, chief investment officer at TrendMacro.

Talks, of course, between the Athens government and its eurozone creditors are set to begin anew in hopes of brokering a deal and avoiding a so-called ‘Grexit,’ or a Greek exit from the 19-nation eurozone economic and political bloc. Still, the crisis continues as Greece’s banks remain closed and its cash availability dwindles as it awaits a decision from the ECB on whether it will keep its cash lifeline open.

A big reason why global markets are not in crisis mode is due to the fact that the Greek crisis is not new, and many financial institutions around the globe have already reduced their exposure to Greek debt. Greece is also a very small part of the eurozone economy. Greece accounts for just “0.33% of global GDP and less than 1% of global stock market value, so perspective is in order,” said Bill Stone, chief investment strategist at PNC.

July 6 — Bloomberg’s Julie Hyman reports on today’s action in the U.S. markets. She speaks on “Bloomberg Markets.” Bloomberg

Stocks around the globe kicked the day off on a negative note. Benchmarks in Asia and Europe fell sharply.

Tokyo’s Nikkei 225 index dropped 2.1% to close at 20,112.12. In Hong Kong, the Hang Seng index fell 3.2% to close at 25,236.28. Chinese shares bucked the trend after regulators and the securities industry intervened to prop up the markets. The Shanghai composite index, which fell into bear-market territory last week after a steep drop, gained almost 6% after the market opened, later closing 2.4% higher at 3,775.91.

After opening sharply lower, European stock markets recovered some ground after Greek Finance Minister Yanis Varoufakis announced his resignation, saying the decision would help Greece’s prime minister reach an accord with the creditors. Major European indexes were volatile as Germany’s DAX index fell 1.5% and France’s CAC 40 dropped 2%. Britain’s FTSE 100 was down 0.8%.

Bond prices rose which sent the yield on the 10-year Treasury note down to 2.31% from 2.39% Thursday. U.S. markets were close Friday for Independence Day. Yields move in the opposite direction of prices.

The euro fell 0.4% to $ 1.1084.

In the Greek referendum, 61.3% of voters rejected demands for further austerity measures by the International Monetary Fund, European Central Bank and European Commission.

European leaders are now expected to meet on Tuesday to discuss a response to the sharp rejection, which raises the prospect of a banking collapse that could force Greece out of the 19-member euro zone.

Without more emergency funding, Greece’s banks could soon run out of cash. Banks were shut last week to avoid a run on deposits and customers are limited to ATM withdrawals of just 60 euros (about $ 66) per day.

Contributing: Laura Mandaro in San Francisco, Jane Onyanga-Omara in London, and Kirk Spitzer in Asia.

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