Stocks swing as Europe, economy fears spread

By Daniel Wagner

— Don’t look away for too long. You might miss a market rally. Or a plunge. The Dow Jones industrial average is up 91 points after being down as many as 245 points on Friday. It had been up by as many as 171 points after a solid jobs report in the morning. Fears that Europe’s growing debt crisis might reach U.S. banks and threaten the fragile economy overshadowed a solid jobs report Friday, a day after the Dow’s worst decline since 2008. Among the other issues investors are most concerned about: anemic growth in manufacturing and the service sector and a decline in consumer spending; hiring levels that aren’t high enough to significantly lower the unemployment rate; and the belief that the government is unlikely to stimulate the economy through spending. The yield on the 2-year Treasury note fell to 0.29 percent, after brushing a record low of 0.26 percent earlier Friday. Frightened investors are buying Treasurys, sending their prices higher and yields lower. The yield on the benchmark 10-year Treasury note rose to 2.48 percent after hitting a low since last year of 2.34 percent. The rush to buy Treasurys is another key reason why markets are moving up and down in such big swings, said Karen Shaw Petrou of Federal Financial Analytics. Many investors are seeking a safe haven from unstable equity markets. Billions more are flowing in from European banks and from customers of Bank of New York Mellon, which holds $23.6 trillion in accounts mainly for institutional investors, she said. Bank of New York Mellon said Thursday that it will start charging some customers a few to hold their deposits. To avoid the fees, institutional clients looked for other investments, said Petrou. Treasurys are one of the only safe options. “Billions and billions of dollars that would be sitting on the sidelines as cash have to find a place to go, and that’s driving the markets crazy,” Petrou said. “This is a huge structural change, and it really is driving a lot of the volatility.”