Market Snapshot
U.S. stocks lose buoyancy on Greece report
SAN FRANCISCO (MarketWatch) -- U.S. stocks lost hold of their meager gains Tuesday as markets headed to a close following a report that Greece was looking for an extension to implement austerity programs.
The Dow Jones Industrial Average (DJIA) closed up 2.71 points, or less than 0.1%, to 13,172.14, after trading as much as 53 points higher earlier in the session. In the final half-hour of trading, the Dow was down as much as 27 points.
The Financial Times reported toward the end of the session Tuesday that Greece is going to seek a two-year extension of its austerity program that would spread cuts out until 2016 and result in a 1.5 percentage-point annual budget deficit reduction rather than 2.5 points. Read more on Greece austerity extension.
Leading the Dow at the close were
On the other hand, the S&P 500 (SPX) fell 0.18 points to close at 1,403.93, as consumer staples and discretionary stocks sought to keep the index afloat. It was down as many as 3.5 points in the final half-hour of trading.
The Nasdaq Composite Index (COMP) declined 5.54 points, or 0.2%, to finish the day at 3,016.98.
U.S. equity markets had been buoyed for most of Tuesday as a rebound in July retail-sales data lifted consumer stocks and economic data out of Europe showed fractional improvement.
Ahead of the bell, the Commerce Department said sales at U.S. retailers increased 0.8% in July, breaking a string of three straight monthly declines, topping expectations for 0.2% growth. Sales excluding autos and gasoline rose 0.9%. Read more on retail sales.
With markets in a classic mid-August low-volume mode, however, investors find themselves at a crossroads.
"If you broaden it out, the market's doing well, but we're reaching the upper edge of a trading range, so people are leery of chasing it here," said Robert Pavlik, chief market strategist at Banyan Partners.
Still, concerns about Europe debt struggles and slowing growth in China are keeping a cautious tone over the market, as investors worry about U.S. corporate earnings dragged by cooler global growth, said Myles Zyblock, chief institutional strategist at RBC Capital Markets.
"We still have a tenuous situation in Europe and the data out of Asia is still pretty soft," he said.
In Europe, data showed that the German economy grew 0.3% on a seasonally-adjusted basis in the second quarter, beating forecasts of a 0.2% rise. French gross domestic product was unchanged in the second quarter, which was better than economists' expectations of a 0.1% decline. Read more on Europe Markets.
Stocks had been buoyed by many factors: Europe's momentum toward some sort of fiscal resolution; economic indicators, even if they are beating lowered expectations; and some anticipation the Federal Reserve could announce QE3, or a third round of quantitative easing, leading up to the Fed's annual retreat in Jackson Hole, Wyo., said John Canally, chief market strategist at LPL Financial.
"We're beating lowered expectations. While not great on an absolute basis, we're getting the best of both worlds: strong enough to not be in a recession but weak enough to get help," Canally said.
Investors may also be waking up to the fact that even in a weak economic recovery, equities markets are still up nearly 20% from a year ago.
Shares of Nasdaq-listed
Declining stocks slightly outnumbered advancers on the NYSE, and by about three to two on the Nasdaq. Trading volume of NYSE-listed stocks topped 2.8 billion shares, while Nasdaq-listed stocks were just over 1.5 billion shares. Average August daily trading volume is 3.42 billion shares for NYSE-listed stocks, and 1.7 billion for Nasdaq-listed stocks, according to Barclays.
U.S. stocks had faltered on Monday, hampered by an empty U.S. economic calendar and a lackluster reading on Japan's growth, resulting in the S&P 500 snapping its longest daily winning streak since December 2010. Read more on Monday's stock action.
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