Stocks recoup most losses on Europe talk
NEW YORK (MarketWatch) -- U.S. stocks closed with mild losses Thursday as speculation of a breakthrough in Europe's efforts to resolve its debt crisis fueled a late-session recovery.
"With the market looking out of control on the downside, there were rumors of some sort of a breakthrough in Europe. Nothing you could put your finger on," but that's when the turnaround came, said Peter Tuz, portfolio manager at Chase Investment Counsel in Charlottesville, Ga.
Tuz cited reports that German Chancellor Angela Merkel had cancelled a press briefing as talks on a growth agreement continued as among the headlines sparking the burst of optimism.
Reports shortly after the market close had European Union leaders agreeing to spend 120 billion euros to stimulate growth and create jobs.
After falling 177 points, the Dow Jones Industrial Average (DJIA) fell 24.75 points, or 0.2%, to 12,602.26, with J.P. Morgan Chase & Co. (JPM) off 2.5% on a New York Times report that its trading losses could top $9 billion.
The S&P 500 (SPX) shed 2.81 points, or 0.2%, to 1,329.04, with technology hit the hardest among its 10 sectors, all of which were in the red.
The Nasdaq Composite (COMP) fell 25.83 points, or 0.9%, to 2,849.49.
Advancers edged ahead of decliners on the New York Stock Exchange, where nearly 907 million shares traded. Composite volume neared 3.9 billion.
In Brussels, European leaders gathered for another summit and in the United States, the Supreme Court upheld the Affordable Care Act of 2010.
"Does Europe need a Lehman-like moment to turbo charge the leaders into effecting decisions? Right now they almost have this agnostic attitude towards the markets, that could change very quickly," said Hank Smith, chief investment officer at Haverford Investments.
He recalls the first U.S. congressional vote on the Troubled Asset Relief Program: "our markets sold off 800 points, saying 'ladies and gentlemen, let's come back to the table and have another vote."
"Bond vigilantes, everyone wants to know what happened to them, well they are in Europe, camped out in Spain and Italy," said Smith, referring to the escalating borrowing costs illustrated in the yields of both countries.
In Thursday trade,
"It's clearly a surprise. This is not having an effect on overall stocks, but [there is] clear celebration by hospitals, because they will benefit from more traffic," said Art Hogan, managing director at Lazard Capital Markets in New York.
"What you now have is an upheld law with some flexibility for the states on the expansion of Medicaid," said Hogan of the high court ruling.
Thursday's economic data had initial jobless claims falling by 6,000 to 386,000 last week, with first-quarter U.S. economic growth again pegged at 1.9%, unchanged from the government's prior forecast of gross domestic product.
The reports "weren't that far out of the range of expectations to be really market moving. Clearly we have experienced some softness in the economy, and perhaps because we had some economic activity move forward with the very good weather in the winter," said Smith.
"Now lower and getting lower energy costs -- gasoline prices -- that should serve to help the economy in the second half," Smith said.
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