Stocks Rebound, Led by Techs; FedEx Skids
Stocks recovered after a report that BP had agreed to place about $20 billion in escrow to pay claims resulting from the oil spill. Techs rebounded.
Stocks started the day lower after housing starts tumbled more than expected and FedEx delivered a disappointing earnings outlook. Worries about Spain and companies with heavy exposure to Europe also weighed on the market.
The Dow Jones Industrial Average was higher in afternoon trading, led by American Express, GE and 3M after gaining over 200 points on Tuesday.
The S&P 500 and the tech-heavy Nasdaq were also trading higher. The CBOE volatility index, widely considered the best gauge of fear in the market, fell below 26.
Investors should separate the economy from what companies are doing and focus on the earnings news over the short-term, said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
“Domestic earnings are going to be very strong and comparisons are going to be very easy compared to the second quarter of 2009,” said Pado. “That’s the driving force for this market rally which we think will carry the S&P to around 1,150 to 1,170 area between now and the end of July.”
BP shares recovered after the White House and BP executives tentatively agreed that the oil giant will create a $20 billion fundto pay claims for the spill.
Dampening sentiment earlier, the premium that investors demand to hold 10-year Spanish government bonds rather than euro-zone benchmark German Bunds hit a euro lifetime high, even as the EU and the IMF denied a report that they and the U.S. Treasury were preparing a financial safety net for Spain.
Billionaire investor George Soros said Europe faces almost inevitable recessionnext year and years of stagnation as policymakers' response to the euro zone crisis causes a downward spiral.
Investor Jim Rogers told CNBC that he bought the eurobut said he's skeptical whenit comes to European governments' promises of austerity.
The euro retreated from a two-week highamid worries about Spain. Oil eased below $77 a barrel and gold dropped below $1,233 an ounce.
FedEx shares skidded after the economic bellwether hit its earnings target and exceeded its revenue target but delivered a disappointing outlook. In contrast, the stock of FedEx's rival UPS was higher.
Also, Nokia tumbled more than 10 percent after the Finnish handset maker issued a profit warning, saying its earnings will be hit by tough competition in the smartphone market.
These warnings came a day after Best Buy missed earnings expectations amid a sharp drop television prices. Also, at least two brokerages cut their price targets on the electronics retailer.
AT&T shares fell after problems with ordering the new iPad and a security glitch on the company's Web site that sent some customers into other customers' accounts. The firm is also suspending preorders of the latest Apple iPhonewhile it tries to meet the fulfill number of orders it has already received.
Shares of Apple , however, rose more than 2 percent and contributed the most to the Nasdaq's slim gain.
Netflix shares continued to rise, even as one analyst downgraded the stock to "hold" from "buy" amid concerns about competition from Hulu.com.
Priceline.com was one of the top gainers on the Nasdaq after Goldman Sachs upgraded the stock to "buy" from "neutral" and raised the firm's price target to $240 from $230.
In the day's economic news: Housing starts dropped 10 percentto a five-month low in May, while a separate report showed producer prices fell 0.3 percent last month, half of the decline expected.
Despite economic worries, some market pros said the possibility of a market double-dip is slim.
"U.S. fundamentals are very strong, the consumer looks good and business spending looks good," Michelle Girard, senior economist at RBS told CNBC. "We’re seeing a very broad-based recovery that has unfolded, has sustainability, and it’s going to take a lot to derail it."
In the financial sector, Goldman Sachs is facing a wave of complaints from consumers over the business practices of its mortgage servicing unit, a subsidiary that collects payments on hundreds of thousands of loans worth tens of billions of dollars.
The Wall Street giant met with over 100 retired partners on Tuesday to reassure them that clients weren't leaving amid the fraud charges.
As lawmakers are in the midst of finalizing a sweeping overhaul of financial regulations, Citigroup said that the proposed reforms are expected to dent the profits of big U.S. banks including Morgan Stanley , JPMorgan and Bank of America as the rules impose a number of restrictions on their traditional way of functioning.
Johnson & Johnson fell after the pharmaceutical firm recalled four additional lots of Benadryl allergy tablets and one lot of Extra Strength Tylenol gels. The firm said it inadvertently failed to include them in a wider recallof over the counter drugs on January 15.
Shares of Fannie Mae and Freddie Mac were halted following news that both were being asked to delist from the New York Stock Exchange and other national exchanges.
Shares of the Chicago Board Options Exchange retreated after jumping 12 percent on their debut.
Electric-car maker Tesla is expected to launch an IPO later this month, according to IPO-research firm Renaissance Capital. Shares are expected to be priced between $14 and $16.
Still to Come:
WEDNESDAY: Disney insider trader hearing
THURSDAY: CPI; weekly jobless claims; current accounts; leading indicators; Philadelphia Fed survey; BP CEO testifies
FRIDAY: Quadruple witching; S&P indexes rebalanced
More From CNBC.com: