Stocks Close Lower As Greece Faces New Elections

(RTTNews) - After showing a lack of direction for much of the session, stocks came under pressure in the latter part of the trading day on Tuesday. Worries about Greece weighed on the markets once again, overshadowing a batch of largely upbeat U.S. economic data.

The major averages moved roughly sideways going into the close, stuck firmly in negative territory. The Dow fell 63.35 points or 0.5 percent to 12,632.00, the Nasdaq slipped 8.82 points or 0.3 percent to 2,893.76 and the S&P 500 dropped 7.69 points or 0.6 percent to 1,330.66.

The selling pressure that emerged on Wall Street came amid continued uncertainty about the political situation in Greece, which is headed for a new round of elections after lawmakers failed to form a coalition government.

The new elections are seen as referendum on whether Greece should remain a member of the eurozone, adding to the recent worries about the outlook for Europe.

However, a batch of relatively upbeat U.S. economic data helped to limit the downside for the markets, with a report from the National Association of Home Builders showing that its reading on homebuilder confidence reached a five-year high in May.

The report showed that the NAHB/Wells Fargo Housing Market Index jumped to 29 in May from a downwardly revised 24 in April. Economists had expected the index to edge up to 26 from the 25 originally reported for the previous month.

A separate report from the New York Federal Reserve showed a much faster than expected expansion in New York manufacturing activity

The New York Fed said its general business conditions index jumped to 17.1 in May from 6.6 in April, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to show a more modest increase to a reading of 10.0.

Additionally, the Commerce Department said retail sales edged up by 0.1 percent in April following a revised 0.7 percent increase in March. The increase matched the expectations of economists.

Core sales, which exclude gas, autos, and building materials, rose by 0.4 percent in April, exceeding estimates for a 0.3 percent increase.

Among individual stocks, shares of Home Depot (HD) fell by 2.4 percent after the home improvement retail giant reported first quarter earnings that exceeded analyst estimates but on weaker than expected sales. The company also raised its full year earnings and sales guidance.

Avon Products (AVP) also came under pressure after Coty Inc. withdrew its $10.7 billion offer to acquire the cosmetics company. The news came in the wake of the expiration of a deadline to begin discussions. Shares of Avon fell by 9.7 percent on the day.

Sector News

Resource stocks helped to lead the markets lower, with gold stocks posting particularly steep losses on the day. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index plunged 3.8 percent to a new two-year closing low.

The weakness among gold stocks came as the price of the precious metal came under pressure amid an increase in the value of the U.S. dollar.

Considerable weakness was also visible among oil service stocks, which moved lower along with the price of crude oil. With crude for June delivery falling $0.80 to a five-month closing low of $93.98 a barrel, the Philadelphia Oil Service Index dropped by 2.5 percent.

Along with resource stocks, airline, semiconductor, and chemical stocks also saw significant weakness on the day, adding to recent losses. Meanwhile, some trucking, railroad, and housing stocks bucked the downtrend by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Tuesday. Japan's Nikkei 225 Index fell by 0.8 percent on the day, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets all turned lower over the course of the session after seeing early strength. The German DAX Index fell by 0.8 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index dropped by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries closed modestly higher after showing a lack of direction for much of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 1.777 percent.

Looking Ahead

The situation in Greece is likely to remain in focus on Wednesday, although traders are also likely to keep an eye on U.S. reports on housing starts and industrial production.

Trading could also be impacted by the release of the minutes of the Federal Reserve's most recent monetary policy meeting.

On the earnings front, Target (TGT), Staples (SPLS), Deere & Co. (DE), and Abercrombie & Fitch (ANF) are among the companies scheduled to release their quarterly results before the start of trading on Wednesday.