Stocks Waver; Banks Decline, Energy Gains
Stocks struggled for direction in choppy, low-volume trading Tuesday, after logging their biggest gain last week in almost two years.
The Dow Jones Industrial Average slipped into negative territory, after closing higher for the fifth session in the previous session.
Among the blue-chip index, Hewlett-Packard declined, while Chevron gained.
The S&P 500 and the tech-heavy Nasdaq were mixed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained above 16.
Among key S&P sectors, financials and utilities led the laggards, while energy gained.
Stocks closed sharply higher Friday to finish their best week almost two years. However, volume is expected to remain thin amid shortened trading week, which could increase volatility. Markets were closed on Monday for the Independence Day holiday.
Greece’s austerity plan had eased market concerns temporarily and now the focus turns to the U.S. debt ceiling issue, according to Marc Scudillo, managing officer of EisnerAmper Wealth Management.
Later this week, investor focus will shift to jobs, with key employment newsexpected Wednesday, Thursday and Friday.
“No one’s expecting jobs to rally quickly in the short-term,” said Scudillo, although he expects the trend to improve in the latter part of the year. “Once we get beyond the debt concerns, then companies will hopefully have the incentive and the initiative to bring on more labor because of more demand.”
Baidu and Microsoft gained following news the Chinese search-engine giant will team up with the U.S. software giant's Bing to develop an English-language search.
Netflix jumped to lead the S&P 500 gainers after the DVD-rental service said it is expanding its video streaming service to 43 countriesin Latin America and the Carribean.
Pfizer was slightly lower after a study that said healthy, middle-aged smokers who take the pharma giant's popular quit-smoking drugs Chantix or Champix, have a higher risk of suffering heart attacksor other serious heart problems.
Shares of Novartis are also in focus following positive late-stage study results for its breast cancer drug Afinitor.
Regional banks such as M&T, PNC , Comerica and Fifth Third slipped after Citigroup cut price targets on the lenders, citing earnings pressure from continued low interest rates.
Gold jumped more than 1 percent as risk aversion returned. Oil prices also gainedwith U.S. light, sweet crude trading near $97 a barrel and London Brent crude rising above $113.
On the M&A front, Southern Union jumped after Energy Transfer Partners increased its bid to buy the natural gas firm in a deal now valued at $8.9 billion.
Ameron surged after National Oilwell Varco said it will buy the fiberglass pipe manufacturer in a deal valued at $772 million.
And Immucor skyrocketed more than 30 percent after the diagnostics firm said it agreed to be bought by private equity group TPG Capital for a fully diluted equity value of $1.97 billion.
Wendy's/Arby's completed its sale of its Arby's chain to the Roark Cap Group and is expected to change its name to The Wendy's and the firm will continue to trade under the ticker symbol "WEN."
On the economic front, factory orders gained 0.8 percent in May, the Commerce Department reported, bouncing back from a previous figure of minus 1.2 percent. However, the report was slightly lower than the 1.0 percent rise expected by economists according to a Reuters survey.
European shares closed higherfor a seventh straight session. Over the weekend, S&P said that any rollover of Greek debt would be considered a default.
That statement once again unsettled investors, but since then, the Financial Times has reported that the European Central Bank will continue to accept Greek government bonds as collateral until all three rating agencies declare that Greece is in default.
On Tap This Week:
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, ADP employment report, ISM non-mfg index, Obama townhall on economy, NYSE shareholders vote on DB merger
THURSDAY: Jobless claims, oil inventories, chain-store sales
FRIDAY: Non-farm payroll, wholesale trade, consumer credit
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