Francois Hollande delivers a speech after defeating Nicolas Sarkozy to… (Lionel Cironneau / Associated…)
Stocks were poised to drop Monday after investors were jolted by Francois Hollande’s election as France’s first socialist president in nearly two decades.
The Standard & Poor’s 500 index futures tumbled 1% to 1,348.90 in early trading late Sunday, indicating a likely decline in U.S. stocks after trading opens Monday morning. The benchmark index slumped 2.4% last week in its worst performance this year.
The drop is not unexpected considering Wall Street has always been uneasy about political change. Those concerns are especially heightened because Europe continues to cope with its ongoing debt crisis.
Hollande’s victory over conservative incumbent Nicolas Sarkozy raises questions about Europe’s economic future. Under Sarkozy, France had joined other European Union nations such as Germany and Greece as they attempted to reign in spending to address the debt crisis.
Meanwhile, Greeks headed to the polls to decide on their next government. Voters there appeared to reject politicians who backed austerity measures, the Associated Press reported.
The political uncertainty made for unease among traders and investors ahead of stock markets opening Monday morning in New York.
“People better buckle up,” Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati, told Bloomberg in a telephone interview. “There are still many hurdles in Europe, there are no easy answers and the electorate is rejecting austerity. People will take a renewed focus on Europe and that focus is not positive.”
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