MARKET SNAPSHOT: Stocks Struggle For Gains As Italy Fears Cool
SAN FRANCISCO — U.S. stocks bounced between minor gains and losses Tuesday after a successful Italian debt sale took the edge off worries of an imminent sovereign default in Europe.
The Dow Jones Industrial Average was recently up 20.29 points, or 0.1%, at 12,526, led by a 2.8% gain in Cisco Systems Inc. , which may be planning to cut 5,000 jobs.
Shares of Dow component Alcoa Inc. moved up 0.2% after reporting financial results late Monday. Excluding charges, the aluminum producer’s second-quarter income from continuing operations was a penny short of expectations.
The S&P 500 index was up 2.95, or 0.2%, at 1,322.44, with financials and utilities leading the index’s 10 subsectors.
The Nasdaq Composite fell 3.47 points, or 0.1%, to 2,799.15.
Ahead of the opening bell, stock futures recovered much of their steep losses after Italy sold $9.4 billion in 12-month bills to respectable demand, though at higher yields.
U.S. stocks looked to be stabilizing after a rocky Monday session as soaring Italian and Spanish bond yields posed the risk that a potential default by Greece would create a mass exodus from other European countries’ debt. The Dow lost 151 points Monday to close at 12,506, its lowest close since June 30.
“The market is beginning to realize that Italy is not Greece,” said Peter Cardillo, chief market economist at Avalon Partners. “There’s been too much exaggeration over Italy. The market wants to move higher.”
Late Monday, Eurogroup finance ministers said they would seek ways to prevent Greece’s sovereign-debt problems from spreading to the rest of Europe even if that meant lengthening the maturities of loans or lowering interest rates, measures that ratings agencies would consider to be a technical default.
Cardillo said that ministers are trying to get the right deal together so markets begin to calm, and that a technical default on Greek debt may be the way out if that’s what stops contagion.
On the New York Stock Exchange, advancers outnumbered decliners slightly with 342.8 million shares trading hands as of 12:10 p.m. U.S. Eastern.
Closer to home, the Commerce Department reported the U.S. trade deficit in May surged 15.1%, largely due to the increased cost of oil imports.
At 2 p.m. Eastern Time, minutes from the last meeting of the Federal Open Market Committee will be released, offering insights into the state of the U.S. economic recovery.
In its June statement, the policy-setting arm of the Federal Reserve characterized the recovery as “continuing at a moderate pace, though somewhat more slowly than the committee had expected.”
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