Stocks End Lower After Ireland Rating Cut
Stocks closed lower for the third session Tuesday after shrugging off the latest Fed minutes even as some officials raised the possibility of further easing and following news that Moody's downgraded Ireland's rating, raising more contagion fears.
The Dow Jones Industrial Average fell 58.88 points, or 0.47 percent, to end at 12,446.88, falling for a third-straight day after fluctuating for most of the session.
Boeing and Intel led the blue-chip laggards.
The S&P 500 declined 5.85 points, or 0.44 percent, to close at 1,313.64.
The tech-heavy Nasdaq slid 20.71 points, or 0.74 percent, to finish at 2,781.91.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, was jumped near 20.
Among key S&P sectors, industrials and techs slipped, while utilities gained.
Moody's cut Ireland's credit rating to junk status, saying the country will likely need further official financing before it can return to international capital markets.
European Union leaders are expected to hold an emergency meetingon Friday after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion to Italy and Spain.
Meanwhile, some Fed officials said they arewilling to provide more monetary policy easingif the recovery continues to slow, according to the latest minutes of their June meeting. Fed officials also said they expect the economy would pick up in the second half of the year.
"Just the pure mention of QE3 is a positive for the equity markets—we saw the big rallies we got off the first QEs that we had," Warren Meyers, former CEO at Walter J. Dowd told CNBC. "But once that's over with, everyone comes back to reality. We're just beginning earnings season and there's so many issues going on with the data coming out with the U.S. and the global issues. We're due to pullback a bit and mellow out."
Alcoa closed lower after the aluminum maker posted a profit in line with forecasts but reported a disappointing outlook. Meanwhile, UBS cut its price on the firm to $16.25 from $16.75. The Dow component unofficially kicked off the second-quarter earnings season.
JPMorgan , Google and Citigroup are among major companies expected to report later this week.
Among techs, Cisco gained, shrugging off news that the networking equipment company could eliminate as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth.
Apple was unchanged following news the chief patent lawyer Chip Lutton Jr., is leaving the company. (Read More: Apple vs Chips—Who's Telling True Tech Story?)
Dell and Hewlett-Packard were also flat after Jefferies started coverage of both tech giants with a "hold" rating and a $17 and $40 price target, respectively.
However, Novellus Systems tumbled more than 10 percent after the chip gear maker
Microchip Tech plunged more than 10 percent to lead the S&P 500 laggards after the semiconductor firm lowered its earnings guidance. Meanwhile analysts were mixed as JPMorgan raised its price target on the firm to $35 from $29, while Stifel cuts its price target to $45 from $50.
Other chipmakers were also under pressure, including Analog Devices and Texas Instruments .
Campbell Soup edged higher after the maker of canned soup said it expects this year's sales to be comparable to 2010's, with earnings up about 1 percent.
News Corp closed flat even after the media giant announced a $5 billion stock repurchase program. Meanwhile, the British government joined efforts to block Rupert Murdoch's bid for broadcaster BSkyB, following the phone-hacking scandal by one of his newspapers.
The euro slipped against the dollar, but came off its session lows. Gold climbed above $1,544 an ounceas investors flocked to the precious metal as a safe haven play. Oil rose in volatile trading—U.S. light, sweet crude gained $2.28 to settle at $97.43 a barrel, while London Brent crude climbed above $117.
Treasury prices were steadyafter the government auctioned $32 billion in 3-year notes, which had a high yield of 0.670 percent and a bid-to-cover of 3.22. Auctions of 10-year notes and 30-year bonds are expected on Wednesday and Thursday, respectively.
On the economic front, U.S. trade deficit surged in May to the highest level in almost three years, due to a big increase in oil imports, according to the Commerce Department.
European stocks ended lower, with banks plunging as investors continued to worry that Greece’s debt problems will spread to Italy and Spain.
Coming Up This Week:
WEDNESDAY: Weekly mortgage apps, import & export prices, Bernanke speaks, oil inventories, 10-yr note auction; Earnings from Yum Brands
THURSDAY: PPI, retail sales, jobless claims, business inventories, 30-yr bond auction, money supply, NPD video games sales; Earnings from JPMorgan and Google
FRIDAY: CPI, Empire state mfg survey, industrial production, consumer sentiment, credit card default rates reported, Dell shareholder mtg; Earnings from Citigroup and Mattel
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