Dow Logs Worst Day of 2012 Amid Greek Drama
Stocks came off their lows but still logged a weekly decline, with the S&P and Nasdaq snapping a 5-week winning streak, following stalled debt talks in Greece, some disappointing economic reports and after S&P downgraded a handful of Italian banks.
The Dow Jones Industrial Average slumped 89.23, or 0.69 percent, to close at 12,801.23, led by DuPont and Alcoa . The blue-chip index logged its worst trading session since the beginning of the year.
The S&P 500 fell 9.31, or 0.69 percent, to end at 1,342.64. The Nasdaq slipped 23.35, or 0.80 percent to close at 2,903. Both the S&P and Nasdaq broke their 5-week winning streaks.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 20 for the first time since January.
For the week, the Dow slid 0.47 percent, the S&P erased 0.17 percent, and the Nasdaq lost 0.06 percent. For the week, Alcoa was the biggest decliner on the Dow, while Disney rose.
Among the key S&P sectors, materials were the biggest loser for the week, while techs gained.
“It’s difficult to be long this weekend…you’re gambling if you wish to be long going into the weekend,” said Todd Schoenberger, managing director at LandColt Trading. “You have all the chaos in Greece, which doesn’t help matters.”
Euro zone finance ministers said the debt-ridden nation will need to make further cutsin order to be granted bailout funds. Meanwhile, Greek workers went on strike, protesting against the austerity measures. (Read More: Portugal Could Follow Greece)
Meanwhile, Greece's Deputy Foreign Minister Marilisa Xenogiannakopoulou, a member of the socialist party, resigned in protest against the tough bailout terms, according to the state television.
In the latest round of disappointment from the euro zone, ratings agency S&P downgraded 34 of 37 Italian banks, including banking giant UniCredit, citing worries over the industry and economic risks in the country.
The move comes after the ratings agency's downgrade of Italy's sovereign rating in January to BBB+, along with downgrades of nine other euro zone countries.
“You had a 7 percent rally [on the S&P 500] from the beginning of the year and that’s the strongest start since 1987, so you are due for a bit of a consolidation and let investors take a breath,” said Phil Orlando, chief equity market strategist at Federated Investors. “And with the headlines associated with Greece, it’s an appropriate place for investors to take a pause.”
Adding to woes, Chinese January trade data fell the most since the depths of the financial crisis, signaling further demand decline.
Among earnings, NYSE Euronext narrowly beat analyst forecasts with a 13 percent profit rise to $212 million in the fourth quarter, after Deutsche Boerse's plan to take over the transatlantic exchange was scrapped last week.
LinkedIn surged after the online networking company beat expectations and handed in an outlook for the quarter and full-year that topped estimates. In addition, Brokerages including Citigroup, JPMorgan and Canaccord Genuity boosted their price targets on the firm.
Nuance plunged after the speech recognition software maker posted quarterly results that missed estimatesfor the first time in a year. Nuance’s technology is used by the Siri application in Apple’s iPhone 4S.
Expedia slumped after the online travel agency reported sales that missed and profit that was hurt by rising costs. However, analysts were mixed on the stock—Barclays cut its price target to $31 from $34, while Citigroup raised its price target to $37 from $32.
Barclays group reported weak numbers for its investment banking unit but a robust performancefor traditional banking operations.
Some traders also said expectations for the bank had fallen following disappointing numbers from the likes of Credit Suisse , adding that Barclays had performed better.
And True Religion plummeted after the upscale denim maker missed earnings expectations. In addition, Citigroup cut its rating on the firm to “neutral” from a “buy.”
Toyota fell after safety regulators opened a preliminary probe to investigate complaints of driver's side door fires in 2007 Camry sedans and RAV4 crossover SUVs. An estimated 830,000 vehicles may be affected.
On the economic front, the trade deficit widened slightly more than expectedto $48.8 billion in December, according to the Commerce Department, climbing to the highest level since July 2008. Economists polled by Reuters had expected the trade deficit at $48.0 billion.
And consumer sentiment index fell to 72.5, according to the Thomson Reuters/University of Michigan survey. Economists expected February's preliminary consumer sentiment index to dip to 74.5, according to a Reuters survey.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
On Tap Next Week:
MONDAY: Obama outlines 2013 budget proposal
TUESDAY: NFIB small business optimism index, retail sales, import and export prices, Fed's Plosser speaks, business inventories, 13-F filings due; Earnings from Metlife
WEDNESDAY: MBA mortgage applications, Empire state mfg survey, treasury international capital, industrial production, Fed's Fisher speaks, housing market index, oil inventories, FOMC minutes, credit card default rates reported; Earnings from Comcast, Abercrombie & Fitch, Deere, CBS, Netapp, Nvidia
THURSDAY: Housing starts, jobless claims, PPI, Bernanke speaks at FDIC hearing, Philadelphia Fed survey; earnings from GM, Applied Materials, Baidu, Nordstrom
FRIDAY: CPI, leading indicators; Earnings from Campbell Soup, Heinz
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