U.S. Equities Cap Volatile Session on High Note

FOX Business: The Power to Prosper

Wall Street recovered from session lows of more than 1% declines across the major U.S. averages Tuesday as traders continued to monitor developments out of Brussels on emergency funding negotiations for Greece amid a plunge in commodity prices.

The Dow Jones Industrial Average rose 93 points, or 0.53% to 17776. The S&P 500 climbed 12 points, or 0.61% to 2081, while the Nasdaq added 5 points, or 0.11% to 4997.

Today’s Markets

Major U.S. averages finished the day higher as traders exercised caution about whether Greece, the nation that’s flirted with a banking collapse, and its creditors would be able to reach a deal on emergency funding soon.

Europeans were set to meet Tuesday in Brussels to discuss a strategy aimed at keeping Greece in the eurozone. The debt-laden country’s prime minister, Alexis Tsipras, was expected to have submitted a proposal ahead of the summit, however, Greece failed to come back to the negotiating table with any new suggestions for reform.

In a statement, Eurogroup President J. Dijsselbloem outlined the next steps for hammering out a deal with the Greeks, but said there was “little time” in which they had left to work.

“The first step will be that the Greek government will send the Eurogroup a new request; a new request letter for ESM support and as soon as this comes in – hopefully tomorrow morning – we will have another Eurogroup conference call to formally start the process of dealing with this request,” the statement read. “I will first ask the institutions to look at the financial situation in Greece, their finances, and debt sustainability and then the institutions will come back to us and we will see if we can formally start the negotiations.”

Meanwhile, the bank “holiday” in Greece was extended until Thursday.

For U.S. equity markets, Matt Kaufler, portfolio manager at Federated Investors, said there’s a slew of factors weighing on sentiment, and that’s causing wild swings in the markets.

“There’s just increased anxiety and uncertainty and markets don’t like that,” he said. “The plunge in commodity prices that’s going on today isn’t helping. There’s general anxiety over where second quarter earnings will come in and what the forward outlook is going to be characterized as.”

He added significant weakness in Chinese markets has taken a backseat to the drama unfolding in Greece, and that the focus should turn to Asia when there’s a final decision on Greece’s membership in the EU.

“If not for Greece and the preoccupation about the impact in Europe, China would be getting much more attention,” Kaufler said. “Volatility continues in China and economic deceleration continues. I think you’ll see it grow in terms of its share of the headlines.”

On the economic front in the U.S., the latest read on international trade from the Commerce Department showed the U.S. trade gap widened to $41.87 billion in May from $40.88 billion in April. The increase was less than expected as economists had forecast the deficit to widen to $42.60 billion.

In commodities, oil continued its downward momentum after a significant downturn in the prior session in which U.S. crude oil prices plunged as a trifecta of persisting global supply concerns, worries over China’s stock market, and developments out of Greece weighed on sentiment. NYMEX crude saw a 7.7% drop, the largest one-day dollar and percentage decline since February. Brent crude, meanwhile, also saw significant losses, dropping 6.3% for its biggest drop since November.

On Tuesday, though, prices continued their fall. U.S. crude prices dropped more than 3% in late-morning action before clawing back ground. NYMEX crude settled 0.23% higher to  $52.65 per barrel, while Brent crude gained 0.56% to $57.10 a barrel.

Meanwhile, copper, largely seen as an economic barometer due to its wide swath of industrial uses, touched its lowest level in six years as it plunged 6% on Tuesday before recovering to settle 2.8% lower at $24 a pound. Gold prices also saw a decline, falling 1.57% on Tuesday to $1,154 per troy ounce, while silver dropped 4.59% to $15 an ounce.

“Whether it was Greece, China, or suggestions that Iran would double exports following the lifting of sanctions, the commodity’s drop appears to be reigniting global growth concerns (we repeat that oil rallies into trouble, not the other way around). We’re on the side of global growth concerns,” Dan Greenhaus, chief strategist at BTIG, said in a note late Monday night.

In corporate news, traders also looked ahead to the kickoff of the earnings season Wednesday with Alcoa (NYSE:AA) reporting its quarterly results after the bell.

Carnival (NYSE:CCL) said it gained necessary U.S. approval to sail some of its cruise ships to Cuba. The world’s largest cruise-ship operator also said it plans to begin those voyages next May, though it is still in discussion for Cuban approvals.

Duke Energy (NYSE:DUK) boosted its quarterly dividend 3.8% to 82.5 cents. The move extends the company’s eight years of annual increases.

According to a report from Reuters, Hostess Brands, the maker of popular snack brands including Twinkies, Ding Dongs, and Ho Hos, will pull itself off the auction block and pursue an initial public offering instead. The move comes after the bankrupt company was bought by private equity firm Apollo Global Management (NYSE:APO) in 2013 for $410 million.

Meanwhile, worries over Greece tempered, but traders still sought the safety of U.S. Treasury bonds. The yield on the benchmark 10-year U.S. Treasury note fell 0.063 percentage points to 2.215%. Bond yields move in the opposite direction of prices.

Across the world in Asia, the Shanghai Composite dropped 1.29% to 3727 days after the nation unveiled unprecedented steps to prevent a stock market crash after a more than 30% plunge over three weeks.

“The speed and force of the equity decline has led party leaders to rush a series of measures aimed at shoring up markets. As an aside, China’s decline has wiped out $3.2 trillion in market value in just three weeks. By contrast, the dot-com bubble in the United States wiped out $5 trillion in market value…but that took two years,” Greenhaus noted.

Elsewhere in Asia, Hong Kong’s Hang Seng dropped 2.69% to 7405, while Japan’s Nikkei rose 1.31% to 20376.

Over in Europe, the Euro Stoxx 50, which tracks large-cap stocks in the eurozone, fell 2.11% to 3294, the German Dax shed 1.96% to 10676, the French CAC 40 lost 2.27% to 4604, while the UK’s FTSE 100 traded 1.58% lower to 6432.

In currencies, the euro fell 0.81% against the U.S. dollar.

“The U.S. dollar remains the undoubted king at present, as a safe haven demand, coupled with Fed policy expectations, drives the buying of the greenback,” Beauchamp wrote. “The move is making itself felt in oil markets once again, where resurgent supply levels have pulled the rug out from underneath the oil price.”