What to watch: Investors' eyes (still) on Europe
NEW YORK -- It's a dismal Hollywood-esque sequel investors were hoping they wouldn't have to see again on TV screens nationwide:
Europe Debt Crisis Part Ten.
What happens in debt-strapped Europe is again affecting Wall Street. The market calm that followed European Central Bank President Mario Draghi's promise two months ago to do whatever it takes to save the eurozone has given way to a bearish flashback of TV images and financial headlines that have spooked markets on and off since 2010.
Images of social unrest in Madrid and Athens are making news as protestors rail against the economic squeeze caused by pension cuts and tax increases. Charts that portray financial stress, such as rising yields on government bonds in indebted countries such as Spain, where borrowing costs jumped above 6% Wednesday, have reappeared on Wall Street. Warnings are again popping up in analyst reports with urgent headlines, such as "Crunch time for Spain."
While the re-emergence of Europe as a risk factor hasn't caused a major sell-off in U.S. stocks, "This week is a reminder that the process (of resolving eurozone issues) is sporadic, halting and sometimes violent," Andrew Busch, a public policy strategist at BMO Capital Markets noted in a report.
Market-moving events to watch: Spain unveils its 2013 budget Thursday, which could hurt or help its chances for a bailout. Friday, Madrid reveals how much cash is needed to recapitalize its banks.
