Stocks Poised to Close Lower for 6th Week

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 won European regulatory clearance to acquire Danish medical services company Ferrosan's consumer healthcare business.

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 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.

Steel stocks including AK Steel , Nucor and U.S. Steel gained after Morgan Stanley said a sector-wide recovery is on the horizon.

Toyota Motor slipped after the Japanese automaker said it expects operating profit this business year to fall more than 30 percentafter the nation's disastrous earthquake severely disrupted car production and slashed sales.

Zipcar soared after JPMorgan raised the firm to "overweight" from "neutral."

AT&T gained after S&P Equity upgraded its rating on the telecom giant to "strong buy" from "buy."

Live Nation Entertainment jumped after the ticketing agent company said it is in talks with Liberty Media to go private.

Among earnings, Lululemon jumped after the yoga-apparel retailer posted stronger-than-expected results, thanks to gains in online and in-store sales.

On the IPO front, Ally Financial delayed a $6 billion public offering, concerning investors about the weak performance of financial stocks during the market's recent decline.

Meanwhile, Pandoraunveiled terms for a bigger IPOas the Internet-radio company said the estimated price was lifted by $3 a share to a range of $10 to $12 each. Earlier, Pandora had planned to price between $7 and $9 a share.

Earlier, widely-followed hedge fund manager David Tepper wrote that stocks would have to fall considerably more before the Fed would start another round of quantitative easing.

"If (the S&P 500 falls) a couple hundred points and financial conditions tightened maybe they would reconsider," the head of Appaloosa Management wrote to CNBC. "But there is no logic to QE3 now and the only result might be more food and energy inflation."

On the economic front, import prices rose for an eight straight monthin May, with the year-on-year increase reaching its highest level in nearly three years, according to the Labor Department.

Stocks were initially pressured after China posted a smaller-than-expected trade surplusin May due to soaring imports and weaker global demand growth. China's sales to the U.S. and Europe slipped to their weakest since late 2009, emphasizing the view that the global economy may be struggling.

Oil prices slippedafter Saudi Arabia began offering more oil to Asian refiners, easing worries about supply following an inconclusive OPEC meeting. U.S. light, sweet crude fell $2.64, or 2.59 percent to settle at $99.29 a barrel, while London Brent crude slipped below $119.

European shares fell to a three-month closing low and posted their sixth week of losses amid concerns over the pace of global economic recovery. Meanwhile, the German parliament voted to back additional aid for Greece.

On Tap Next Week:

MONDAY: Fed's Lacker speaks, NPD video game sales, GOP Presidential debate
TUESDAY: NFIB small business optimism index, PPI, retail sales, business inventories; earnings from Best Buy
WEDNESDAY: Weekly mortgage apps, CPI, Empire state mfg survey, Treasury international capital, industrial production, housing market index, Geithner testifies before House Financial Services, oil inventories, credit card default rates reported, Dell shareholder mtg, Google Chromebook goes on sale
THURSDAY: Housing sales, jobless claims, current account, Philadelphia Fed survey, Fed's Fisher speaks, money supply; earnings from Kroger, Pier 1 Imports, Smithfield Foods, Research In Motion
FRIDAY: Consumer sentiment, leading indicators, quadruple witching

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