Global stocks are falling Friday after Italy‘s new government announced a big increase in spending. Italy’s main stock index fell about 4 percent and other European indexes also took sharp losses as investors worried that the government’s plan will lead to a clash with European Union leaders who want Italy to reduce its debt level. Banks are falling.
Tesla stock is plunging after federal regulators moved to oust Elon Musk as the electric car maker’s CEO following his tweet last month that he was close to a deal to take Tesla private.
U.S. indexes are slightly lower at the end of a rough week, but the third quarter has been the strongest for the U.S. market in several years.
KEEPING SCORE: The S&P 500 index lost 3 points, or 0.1 percent, to 2,910 as of 10 a.m. Eastern time. The Dow Jones Industrial Average was little changed at 26,441. The Nasdaq composite gave up 9 points, or 0.1 percent, to 8,032. The Russell 2000 index of smaller-company stocks rose 2 points, or 0.1 percent, to 1,692.
The S&P is up 7.1 percent in the third quarter, its best showing since a gain of just under 10 percent in the fourth quarter of 2013.
ITALIAN SPENDING: The new spending plans announced by Italy’s government would push its budget deficit to 2.4 percent of gross domestic product next year, a significant jump from previous government’s target of 1.6 percent this year. While that’s still within EU limits, it is likely to set up a clash with leaders who want Italy to bring down its debt level, which is the second-highest of any EU country after Greece.
Italy’s FTSE MIB plunged 4.3 percent while the German DAX sank 1 percent. France’s CAC 40 lost 1 percent and the FTSE 100 index in Britain shed 0.4 percent.
Yields on Italian government bonds rose sharply, a sign of lower investor confidence in the government’s financial strength. The yield on Italy’s 10-year government bond jumped to 3.22 percent from 2.89 percent, a huge move.
Among European banks, Credit Suisse fell 2.3 percent to $15.03 and Barclays dipped 2.4 percent to $9.06. HSBC gave up 1.7 percent to $44.12. U.S. banks also took losses. Citigroup fell 1.6 percent to $71.75 and Goldman Sachs shed 0.9 percent to $225.75.
TWEETSTORM: Tesla dropped 12.2 percent to $269.86 after the Securities and Exchange Commission said it has asked the U.S. District Court in Manhattan to bar Musk from serving as an officer or director of a public company. The SEC launched an investigation after Musk tweeted in early August that he had secured the funding for a deal to take Tesla private. It soon became clear that the company wasn’t close to a deal, and the SEC says Musk committed securities fraud with his statements about plans to take the company private.
Musk called the action unjustified. His tweet said the company would go private at $420 per share, and the stock jumped to almost $380 that day. It’s fallen 29 percent since then.
ASIA’S DAY: Japan’s Nikkei 225 jumped 1.4 percent after the country agreed to open negotiations on a trade agreement with the United States. The move won Japan relief from the immediate threat of punitive tariffs on its auto exports to the U.S. Hong Kong’s Hang Seng index added 0.3 percent and South Korea’s slipped 0.5 percent.
ENERGY: Benchmark U.S. crude rose 0.2 percent to $72.24 per barrel in New York. Brent crude, used to price international oils, added 0.6 percent to $81.87 per barrel in London.
BONDS: Bond prices edged higher. The yield on the 10-year Treasury note rose to 3.04 percent from 3.05 percent.
CURRENCIES: The dollar rose to 113.46 yen from 113.42 yen. The euro fell to $1.1585 from $1.1658.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay