Markets fall, Europe hit by downgrades again

Markets fell again on Thursday. The S&P 500 fell 1.5 percent while the STOXX Europe 600 dropped 1.1 percent.

Spain’s IBEX 35 Index fell 1.1 percent to a nine-year low on fears of a downgrade of its banks. Those fears were confirmed after markets closed when Moody’s Investors Service announced that it was downgrading 16 of the nation’s banks.

Another rating downgrade on Thursday fell on already-beleaguered Greece. Fitch Ratings downgraded Greece's credit rating to CCC from B-. The country’s ceiling was lowered to B-. Greece’s ASE Index fell 3.4 percent to its lowest level since 1990.

Fitch also said that it would place all euro area sovereign ratings on Rating Watch Negative following the Greek elections if a Greek exit from the EMU becomes probable in the near term.

To add to the bad news on Europe, US economic data on Thursday came out unexpectedly weak. The Conference Board's index of leading economic indicators dipped in April for the first decline since September, falling 0.1 percent compared to an increase of 0.3 percent in March. The Philadelphia Federal Reserve's manufacturing index sank to -5.8 in May from 8.5 in April, registering its first negative reading since September.