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Storming off session lows, U.S. stocks landed virtually unchanged on Tuesday as Wall Street managed to mostly shrug off its latest batch of jitters about Greece and a disappointing retail sales report.
The Dow Jones Industrial Average rose 4.24 points, or 0.03%, to 12878.28, the Standard & Poor's 500 slipped 1.27 points, or 0.09%, to 1350.50 and the Nasdaq Composite gained 0.44 points, or 0.02%, to 2931.83.
For the third day in a row, the global financial markets were swayed greatly by concerns about Europe's never ending sovereign debt crisis. While enthusiasm for Greece passing a painful austerity package helped send the Nasdaq Composite to 11-year highs on Monday, there were new signs that a bailout is anything but a done deal.
The Greek concerns combined with a weaker-than-expected report on retail sales in January to send the blue chips sinking as much as 80 points before staging a last-minute comeback. The late rally appeared to be sparked by a Greek conservative leader promising to deliver a commitment to international lenders on Wednesday, clearing up a hurdle to its bailout.
“The market has really weathered that intraday selloff with some degree buoyancy,” said Peter Kenny, managing director at Knight Capital Group. “The reasons to sell are not compelling. The reasons to hold are. That’s why the market’s bias is positive."
While the day’s negative factors provoked traders to covered their positions, they weren’t enough to cause institutional investors to “give up the ship,” said Kenny.
Wall Street sought to make sense of a number of conflicting headlines out of Europe on Tuesday.
The head of the Eurogroup, which is a group of eurozone finance ministers, said the Greek bailout meeting was canceled due to the need to do further work in a number of areas, including how to close a 325 million euro fiscal gap in 2012 and certain necessary political pledges from Greek leaders. Instead of the Brussels meeting, the Eurogroup plans to convene on Wednesday via a teleconference.
However, late in the day a Greek conservative leader promised to deliver a commitment to the nation's international creditors on Wednesday, according to Reuters.
The news underscores the number of hurdles still facing Greece as it attempts to secure a $162 billion bailout and avoid a disorderly default on March 20 when it faces $19 billion of bond redemptions.
Meanwhile, Moody's downgraded the credit ratings of Italy, Spain, Portugal, Slovenia, Slovakia and Malta late Monday, citing the fragility of the European banking system. The ratings company also surprised some by warning it could downgrade the debt rating of not only France, but also the U.K., which is not part of the eurozone.
On the other hand, a new report revealed Germans turned optimistic about the economy in February for the first time since May 2011.
With that backdrop in mind, the euro was off 0.51% to $1.3117 as U.S. markets closed, erasing some of its earlier losses. Major European lenders like Barclays (NYSE:BCS) and Deutsche Bank (NYSE:DB) closed solidly in the red.
Selling began on Tuesday after the Commerce Department said U.S. retail sales rose 0.4% in January, missing forecasts from analysts for a jump of 0.7%. Surprisingly, sales were stronger when the auto sector is included, increasing 0.7%. December retail sales were cut to unchanged from up 0.1%.
In the wake of that report, retailers such as Wal-Mart (NYSE:WMT) and Abercrombie & Fitch (NYSE:ANF) closed mixed.
Separately, new data showed U.S. import prices rose by an in-line 0.3% in January, while export prices gained 0.2%, matching estimates.
Big banks led the way down on Tuesday as the KBW banking ETF retreated about 3%. Bank of America (NYSE:BAC) dropped 3% after being downgraded to "neutral" from "buy" by analysts at Citigroup amid concerns about earnings headwinds.
Meanwhile, after posting steady gains earlier, the commodities complex closed lower. Crude oil fell 17 cents a barrel, or 0.17%, to $100.74. Posting its third-straight decline, gold dropped $7.10 a troy ounce, or 0.41%, to $1,715.90.
Apple (NASDAQ:AAPL) is testing a new tablet device that will feature a smaller, 8-inch screen as the consumer electronics maker looks to capture market share, The Wall Street Journal reported. It's not clear what the new device would be called. Apple is also preparing to unveil in March the iPad 3, which will feature a higher resolution screen as its predecessor, the paper reported.
Yahoo! (NASDAQ:YHOO) slumped almost 5% amid a series of reports that talks over a tax-free spinoff of its Asian assets have collapsed. The complex transaction was targeted at saving the struggling Internet company $4 billion in U.S. taxes.
Goodyear (NYSE:GT) notched its first annual profit in four years, but the tire maker’s fourth-quarter non-GAAP profit of 3 cents a share badly missed Wall Street’s expectations for 20 cents. Revenue rose 12% to $5.7 billion, trailing forecasts for $5.88 billion.
The U.K.'s FTSE 100 slipped 0.10% to 5899.87, Germany's DAX fell 0.14% to 6729.37 and the French CAC 40 lost 0.27% to 3375.33.
In Asia, Japan's Nikkei 225 advanced 0.59% to 9052.07 and Hong Kong's Hang Seng rose 0.15% to 20917.80.