Stocks Drop for Fourth-Straight Day Amid Global Uncertainty
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A round of mixed global economic data, uncertain signals from Germany on whether it will back the eurozone's rescue fund and tepid earnings from aluminum giant Alcoa knocked Wall Street into the red on Tuesday.
Today's Markets
The Dow Jones Industrial Average fell 83.2 points, or 0.65%, to 12653, the S&P 500 dipped 11 points, or 0.81%, to 1341 and the Nasdaq Composite slid 29.4 points, or 1%, to 2902.
The sectors that posted the worst performance on the day were: technology, industrial, energy and materials. On the other side of the spectrum, traditional defensive plays utilities and consumer staples managed to stay afloat.
Oil futures were under pressure as well. The benchmark contract traded in New York fell $2.08, or 2.4%, to $83.91 a barrel. Wholesale New York Harbor gasoline slipped 0.45% to $2.747 a gallon.
Mixed News from Europe
The Eurogroup, which represents eurozone finance ministers, released a statement overnight reaffirming its "strong commitment to do whatever is necessary to ensure the financial stability of the euro area." While it didn't offer many specifics, it said Spain's banks would be recapitalized through the European Financial Stability Fund (EFSF), the bloc's temporary rescue facility, until the European Stability Mechanism (ESM) comes online. It also reiterated a previous statement that neither fund will become a senior debt holder in the banks it injects capital into, helping to relieve worries about the effectiveness of the move.
Market participants remained wary: "Overall we don't know how much money it's going to take to solve the issue," James Hughes, a senior market analyst at Alpari, said in an interview with FOX Business. "It's like a band-aid."
European industrial production data, which tracks factory activity, released on the day were mixed. The U.K. and Italy both came in ahead of expectations, but France came in weaker.
Traders were also watching the German constitutional court that is hearing arguments on whether the country will support the eurozone fiscal pact and the creation of ESM. The court refused to set a date for when it will make its decision, according to multiple media reports. Germany is Europe's biggest economy and its backing is critical in any euro-wide measures so the markets are often especially sensitive to headlines from the country.
The Euro Stoxx 50, which tracks eurozone blue chips, climbed 0.63%. The euro slipped 0.03% to $1.2309.
Chinese Trade Data: A Mixed Bag
Elsewhere, China's trade surplus expanded dramatically in June. However, part of that expansion was led by a much slower-than-expected growth in imports. Some economists suggested that this may be a sign of faltering domestic demand, however others disagreed.
"We think the June import data paint a more positive picture than it first appears," economists at Barclays wrote in a note to clients. "We see import volume recovering, albeit slowly, along with a gradual improvement in domestic demand."
Tepid Earnings
In corporate news, Alcoa (NYSE:AA) kicked off earnings season after the close on Monday by beating analysts' expectations on the top and bottom lines. Shares of Advanced Micro Devices (NYSE:AMD) came under pressure after the chipmaker cut back its second-quarter revenue expectations to a drop of 11% from the prior quarter. The company had initially forecast a gain of 3%, plus or minus 3%.
In metals, gold fell $9.30, or 0.59%, to $1,580 a troy ounce.
Foreign Markets
The Euro Stoxx 50 climbed 0.63% to 2242, the English FTSE 100 gained 0.65% to 5664 and the German DAX jumped 0.79% to 6438.
In Asia, the Japanese Nikkei 225 fell 0.44% to 8858 and the Japanese Nikkei 225 slipped 0.16% to 19396.