Wall Street's Losses Vanish in Late-Day Run

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Published May 23, 2012

| FOXBusiness

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Wall Street managed to put an end to a brutal global rout on Wednesday, with the S&P and Nasdaq ending in the green as traders parsed through a slew of headlines from Europe.

Today's Markets

According to preliminary calculations, the Dow Jones Industrial Average slumped 43.7 points, or 0.35%, to 12459, the S&P 500 dipped 1.9 points, or 0.14%, to 1315 and the Nasdaq Composite rose 2.3 points, or 0.08%, to 2841.

U.S. markets made a significant comeback on the day. Indeed, the Dow was down 191 points at the lows of the session. The VIX, which tracks volatility on Wall Street, also pared its gains significantly too, recently trading higher by 0.4%.

U.S. Treasury yields fell as traders bid up the safe-haven asset. The yield on the 10-year dropped 0.069-percentage point to 1.724%

Market participants across the globe have worried about the growing chances that Greece may be forced to exit the eurozone in a move that would send shockwaves across markets there. On Tuesday afternoon, former Prime Minister Lucas Papademos was reported to have said the country is making preparations for a possible exit. The comments ended a modest rally in U.S. markets and set the stage for a weak European open. Papademos later backtracked, saying preparations weren't in fact underway, according to Dow Jones Newswires.

On top of that, German officials once again voiced their lack of support for the idea of eurobonds, which other countries, like France, have supported as a way to help ease the crisis. Germany's approval would be necessary for the common issuance to succeed because they would rely on the country's strong economy and debt rating for backing. 

Traders said that they would be watching the informal eurozone summit slated for later in the day in Brussels for possible clues on actions leaders may take. However, expectations were fairly dim for any concrete conclusions to be drawn before the formal summit next month.  

The Euro Stoxx 50, which tracks eurozone blue chips, tumbled 2.7%. Exchanges in Germany, France, Spain and other European nations sustained similarly heavy selling. 

A better-than-expected report on the housing market did little to ease Wall Street's anxiety. Sales of new single-family homes rose 3.3% in April from March to a 343,000-unit annualized rate. Economists were expecting sales to rise to an annualized rate of 335,000 units. 

A report on sales of previously-occupied homes released on Tuesday showed sales at the highest rate in nearly two years last month. The market for homes has been sluggish since the financial crisis as lending conditions have remained tight and demand has been stubbornly tepid. 

Oil prices continued sliding on the day as nuclear talks between major Western powers and Iran were considered to be going in a positive direction. Also, the Energy Department said oil stocks jumped 883,000 barrels last week, while gasoline stocks slid 3.3 million barrels. Analysts were looking for an oil build of 500,000 barrels, and a gasoline draw of 700,000 barrels. 

Crude traded in New York dipped $1.95, or 2.1%, to $89.90 a barrel. Wholesale New York Harbor gasoline fell 2.2% to $2.87 a gallon. 

In metals, gold tumbled $28.20, or 1.8%, to $1,548 a troy ounce.

On the corporate front, Hewlett-Packard (HPQ) is set to report its quarterly earnings after the closing bell. Economists expect the blue-chip technology company to have earned 91 cents a share. 

Foreign Markets

The Euro Stoxx 50 tumbled 2.7%, the English FTSE 100 fell 2.5% to 5266 and the German DAX shed 2.3% to 6286. 

In Asia, the Japanese Nikkei 225 sold off by 2% to 8557 and the Chinese Hang Seng slid 1.3% to 18786.

URL

http://www.foxbusiness.com/markets/2012/05/23/stocks-drop-as-traders-eye-europe/