Plus   Neg

Stocks Close Mostly Lower But Well Off Worst Levels


After falling sharply in early trading on Tuesday, stocks regained some ground over the course of the afternoon but still closed moderately lower. Uncertainty about the political situation in Europe continued to weigh on the markets.

The major averages ended the session well off their worst levels but remained stuck in the red. The Dow fell 76.44 points or 0.6 percent to 12,932.09, the Nasdaq dropped 11.49 points or 0.4 percent to 2,946.27 and the S&P 500 slipped 5.86 points or 0.4 percent to 1,363.72.

The substantial weakness seen in early trading was partly due to concerns that the results of recent elections in France and Greece will negatively impact recent efforts to address the European debt crisis.

Negative sentiment was generated by news that Greece's mainstream conservatives failed to form a coalition government following Sunday's election, giving the Left Coalition party an opportunity.

While the Left Coalition party is expected to face an uphill battle, its efforts could lead to a government opposed to the terms of the bailout by the European Union and the International Monetary Fund.

Traders also continued to express concerns about the impact of Socialist Francois Hollande's election as the next president of France.

Hollande is expected to butt heads with German Chancellor Angela Merkel, as he has expressed significant opposition to using austerity measures to address the European debt crisis.

The continued focus on the latest political developments in Europe came amid another light day on the U.S. economic front.

Nonetheless, selling pressure waned over the course of the morning and some traders looked to pick up stocks at reduced levels following the early sell-off.

Among individual stocks, shares of Electronic Arts (EA) came under pressure on the day after the video game maker reported better than expected fourth quarter results but provided disappointing first quarter guidance. EA ended the session down by 4.3 percent but off its worst levels.

Fast food giant McDonald's (MCD) also ended the day in the red after reporting a smaller than expected increase in April comparable sales.

Meanwhile, shares of OfficeMax (OMX) moved sharply higher after the office supplies retailer reported better than expected first quarter earnings. OfficeMax jumped 11.1 percent on the day.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index rose by 0.7 percent, while Hong Kong's Hang Seng Index ended the day down by 0.3 percent.

Meanwhile, the major European markets all showed notable moves to the downside on the day. While the French CAC 40 Index plunged 2.8 percent, the German DAX Index and the U.K.'s FTSE 100 Index tumbled by 1.9 percent and 1.8 percent, respectively.

In the bond market, treasuries extended a recent upward move amid the uncertainty about Europe. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to a three-month low of 1.837 percent.

Despite the recovery attempt by the broader markets, significant weakness remained visible among gold stocks. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index dropped 3.4 percent to a two-year closing low.

The weakness among gold stocks came amid a sharp drop by the price of the precious metal, with gold for June delivery tumbling $34.60 to $1,604.50 an ounce.

Steel stocks also saw considerable weakness on the day amid concerns about the outlook for global demand. The NYSE Arca Steel Index fell by 1.9 percent to its lowest closing level in four months.

Electronic storage, housing, and brokerage stocks also posted notable losses, although most sectors ended the session well off their worst levels.

While the economic calendar remains relatively light on Wednesday, the Commerce Department's monthly report on wholesale trade may attract some attention.

Trading could also be impacted by reaction to quarterly results from Disney (DIS), with the entertainment giant releasing its quarterly results after the close of trading.

by RTTNews Staff Writer

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