Stocks pared some of their earlier losses, but were still poised to finish lower for the sixth-consecutive week—the longest losing streak since 2002.
The Dow Jones Industrial Average shaved earlier losses and clawed back near the 12,000-mark, after snapping a six-day losing streak in the previous session. The last time the Dow closed below 12,000 was Mar. 18, 2011.
With most blue-chip components trading lower, Travelers led the laggards after the property insurer said it is slowing down its share buyback program. And Pfizer slid after the drugmaker
The S&P 500 dipped, while the tech-heavy Nasdaq traded near the breakeven level for 2011. Some strategists are watching to see if the S&P closes below the 1,275 support level. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped more than 3 percent to above 18.
All key S&P sectors were lower, led by energy, consumer discretionary and health care.
The dollar extended gains against the euro, which came under pressure as concerns over euro zone debt came back to the spotlight, while gold slid more than 1 percentto trade below $1,537 an ounce.
“We’re in for a correction,” said Kenny Polcari, managing director at ICAP Equities. “Yesterday’s rally was just a bargain hunter’s market.”
Polcari said the S&P will continue to trade between 1,250 and 1,325—the 200-day and 50-day moving averages. The next big catalyst for markets is the earnings reports, he explained, which will kick off in another four weeks.
Meanwhile, Rob Stein, portfolio manager and senior economist of Astor Asset Management, said while there may be some further market declines, it is still not the beginning of a bear market or another recession.
“Markets being down for 6 weeks is an anomaly, but I don’t think it takes away from the fact that GDP’s growing—it’s still positive,” Stein noted. “We’re revering to the mean and markets are trying to find an equilibrium…we are still up year-over-year.”
Financials pared losses after news that extra capital charge on the biggest banks is likely to be at 2 to 2.5 percent, instead of the widely-reported 3 percent, CNBC learned. JPMorgan , BofA and Citigroup cut most of their earlier losses. Regulators will be meeting formally in two weeks to discuss the charge.
"[The news] moved the banks...it moved the tape," commented a trader.
The report comes after JPMorgan's CEO Jamie Dimon confronted Fed chairman Ben Bernankeearlier this week over the numerous new banking regulations, including a new surcharge for the biggest banks.
Earlier, banks tumbled after the Fed said it is proposing that banks with $50 billion or more in assets be subjected to annual stress tests.
Banks have been on the decline in the last few weeks and is the worst performer this year. However, Stein said the sector is likely to see a rebound in the third-quarter “once interest rates normalize.”
The semiconductors tumbled with the Philadelphia semiconductor index dipping below its 200-day moving average. Intel declined after Macquarie cut its price target on the tech giant to $24.60 from $26.70. Rivals Taiwan Semi and TexasInstruments also lagged.
Kohlberg Kravis Roberts and TPG have decided not to bid for a stake in NokiaSiemens Networks after failing to agree on a price and level of control over the company.
