Stocks Fall Amid Europe Woes; Intel Skids
Stocks struggled to hold gains Tuesday as worries about Europe offset encouraging comments from Fed Chairman Ben Bernanke.
The Dow Jones Industrial Average spent much of the morning in negative territory after a quick pop at the open. This came after the blue-chip index lost over 115 points, or 1.2 percent, in the previous session.
Bernanke said he sees the recovery gaining momentum — enough to avoid a double-dip recession — but cautioned it won't be smooth sailing. The Fed chairman was speaking at the Woodrow Wilson International Center for Scholars, a nonpartisan research group.
"My best guess is we will have a continued recovery, but it won't feel terrific," Bernanke said, adding that economic growth won't be robust enough to drive down the unemployment rate, currently at 9.7 percent.
In Europe, finance ministers also attempted to restore market confidence on Monday by agreeing how to launch a massive anti-contagion program if necessary.
But it seems like each day brings a different country to worry about. Yesterday, it was Hungary. Today, it's Bulgaria. The EU has "some concerns" about Bulgaria, EU Economic Affairs Commissioner Olli Rehn said Tuesday.
Hungary's Prime Minister attempted to assuage public concerns, announcing some tough new austerity measures, including cutting public wages and overhauling the tax system. This came after some officials from the prior administration last week warned of a strong possibility for a Greece-style crisis in Hungary.
The euro rose slightlybut was still near four-year lows against the dollar on Tuesday.
Most Asian stock indexes closed higher on Tuesday, as traders waited for Chinese economic data and a European Central Bank meeting later in the week. The Nikkei average rose 0.2 percent in a volatile session, and investors went bargain-hunting after the benchmark suffered its biggest one-day fall in 14 months.
Meanwhile, small business owners in the U.S. said they are more optimistic about the recoveryabout the recovery in a May survey than they have been in the past two years.
Oil rose towards $72on Tuesday as investor worries faded that Europe's debt crisis would curb the demand for energy. And gold topped $1,250 an ounce.
Energy stocks skidded after Goldman Sachs downgraded deepwater drillers, saying the current six-month moratorium on deepwater drilling could be extended.
BP shares lost more than 6 percent, while Transocean lost about 10 percent.
Intel was the biggest drag on the Dow after the chip giant was downgraded to "neutral" by SIG Susquehanna, which cited a weakening PC market.
And Bank of America-Merrill Lynch cut price targets on seven Internet stocks, including Google , Amazon and Priceline , citing worries about earnings due to the strengthening dollar.
In fact, techs were the biggest decliner, followed by consumer discretionary and industrials as investors backed away from recovery trades.
The latest iPhone hit the shelves on Monday, as Apple attempts to stay one step ahead of rivals like Google in the smartphone market. The new $199 "iPhone 4" is a quarter slimmer than the current handset and with about double the picture quality. It also sports the in-house A4 processor and allows video chat.
McDonald's shares rose after the fast-food giant reported a larger-than-expected 4.8 percent rise in global sales for May.
Financials were mostly higher but Rochdale analyst Dick Bove cut his price target and earnings forecast on JPMorgan , saying the brokerage is "facing challenges in its business model almost everywhere."
This came after Bove last week slashed his price target and forecastfor Goldman Sachs .
Depomed saw its shares jump a day after it said its market application for an experimental pain drug had received Food and Drug Administration approval, triggeriong a $10 million milestone payment from the drug's licensee.
Talbot's gained after the retailer beat earnings expectations and affirmed its full-year outlook.
The latest corporate earnings results are expected from Dollar General , vehicle and engine maker Navistar , and apparel design company Oxford Industries .
TUESDAY: Primary & special elections; NFIB small business optimism index; McDonald's May sales data; 3-yr note auction
WEDNESDAY: Weekly mortgage apps; wholesale trade; 10-yr note auction; Fed's beige book; Bernanke speaks; Fed's Lacker speaks; Caterpillar shareholders meeting
THURDSAY: International trade; weekly jobless claims; quarterly services survey; 30-yr bond auction; Treasury budget; Earnings from: Del Monte Foods, National Semiconductor
FRIDAY: Fed's Plosser and Kockerlakota speak; retail sales; consumer sentiment; business inventories; S&P index rebalancing details announced
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