Spain will make a fourth attempt to convince investors its banking system is solid after failing to do so with three prior tries in as many years.
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U.S. stocks sank Tuesday, although the major indexes closed off session lows, as Greece’s uncertain political situation keeps investors on edge.
The Dow Jones industrial average () fell 76 points, or 0.6%, to 12,932. The S&P 500 () tumbled 6 points, or 0.4%, to 1,364. The Nasdaq () declined 11 points, or 0.4%, to 2,946.
The selling picked up steam during the morning, with the S&P 500 touching a 2-month low, as stocks in Europe fell sharply. But major indexes in the United Sates pared losses in the last hour of trading.
All eyes continue to be on Europe, after Greece’s main center-right party failed to form a coalition government. Now, the left-wing coalition, which is opposed to austerity as the way to close Greece’s debt gap, will have three days to form a government.
The latest development is feeding investors’ fears that Greece might have to drop out of the eurozone.
"The political stalemate in Greece is casting a shadow over risk markets in general and equities in particular," said Nick Stamenkovic, investment strategist at RIA Capital Markets in Edinburgh. "Investors are questioning whether Greece will be a part of the single currency at the end of this year."
The Greek stock market fell 3.6%, adding to sharp losses in the previous session.
Greece could drop euro but tragedy won’t follow
As various parties grapple with forming a coalition government in Greece, it’s looking increasingly likely that new elections will need to be held, most likely in mid-June. That throws into question whether Greece will be forced to renegotiate its bailout funding.
Greek leftist leader Alexis Tsipras on Tuesday laid out the radical agenda he hopes to pursue if he becomes prime minister, including the cancellation of international loan agreements to Greece that forced the country into sharp budget cuts.
Meanwhile, European Union leaders are grappling with the need to boost economic growth during a time of austerity. Early Tuesday, European Council president Herman Van Rompuy set May 23 as the date for an unscheduled EU summit, announcing on his Twitter feed that it would be an "informal dinner."
In addition to the "re-circulating woes in Europe," investors were also rattled by weak sales numbers from McDonalds, said Peter Tuz, portfolio manager at Chase Investment Counsel in Charlottesville, Va.
"More uncertainty in Europe is not good for U.S. markets, nor is the weakness in consumer-oriented stocks," said Tuz.
U.S. stocks recovered from a shaky start Monday, following elections in France and Greece over the weekend payday loan.
World markets: European stocks fell sharply late in the day to end lower. Britain’s FTSE 100 () was down 1.7%. The DAX () in Germany shed 1.9%. In France, the benchmark CAC 40 () fell 3% one day after Socialist party leader Francois Hollande won the nation’s presidential election.
In the bond market, investors bought €1.3 billion worth of short-term Greek government bills out of €2.6 billion offered. The yield was 4.69%, up from 4.55% at the last auction in April.
Asian markets ended mixed. The Shanghai Composite () slid 0.1% and the Hang Seng () in Hong Kong lost 0.2%, while Japan’s Nikkei () rose 0.7%.
Companies: Shares of fashion accessories maker Fossil () plunged after it reported first-quarter revenue that fell short of even the lowest forecasts.
Fast-food chain Wendy’s () reported operating income of 1 cent a share, falling short of analysts’ forecasts for a profit of 3 cents a share.
Shares for Electronic Arts () slipped after the video-game maker cut its first-quarter outlook for the period ending in June.
The Government Accountability Office issued a report Tuesday that the U.S. Treasury may eventually turn a $15.1 billion profit on its bailout of insurer AIG (, Fortune 500) when all final payments and asset sales are complete.
McDonald’s Corp.’s (, Fortune 500) same-store sales increased 3.3%, both globally and in the U.S. market. Analysts were expecting sales to grow 5%, according to Reuters. Sales rose 3.5% in Europe, but only 1.1% in the unit that includes Asia-Pacific, Middle East and Africa.
In other corporate news, shares of DirecTV (, Fortune 500) slipped even as the broadcast satellite provider reported slightly better earnings and sales in line with forecasts.
Entertainment conglomerate and Dow component Walt Disney (, Fortune 500) will report earnings after the close. The studio had a blockbuster weekend with "The Avengers," which broke records with box office sales of $200.3 million during opening weekend. Those sales will not be included in this report, while an estimated $200 million in losses on epic bomb "John Carter" will.
Currencies and commodities: The dollar gained strength against the euro and British pound, but fell versus the Japanese yen.
Oil for June delivery fell 93 cents to end at $97.01 a barrel.
Gold futures for June delivery dropped $34.60 to settle at $1,604.50 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell Tuesday, leaving the yield at 1.84%.
Asian stocks fell Monday after budget talks in the Netherlands collapsed over the weekend and a Socialist who wants to put France’s austerity plans in reverse won the first round of the country’s presidential election.
Japan’s Nikkei 225 index fell 0.3 percent to 9,533.48, as a strengthening yen hurt high-tech exporters. Hong Kong’s Hang Seng lost 0.7 percent to 20,871.23 and South Korea’s Kospi fell 0.3 percent to 1,969.69. Australia’s S&P/ASX 200 dropped 0.2 percent to 4,357.70.
Over the weekend, Dutch lawmakers failed to resolve differences over budget cuts needed to bring the Dutch deficit back within the European Union limit of 3 percent of gross domestic product.
The government is expected to resign within the coming days and call elections later this year, making it the latest European government forced out of office by the continent’s financial crisis.
Markets were also rattled by first-round results in France’s presidential election. Socialist candidate Francois Hollande garnered more votes than incumbent conservative President Nicolas Sarkozy.
Hollande wants to renegotiate a European treaty intended to limit excessive government spending in order to emphasize growth over austerity low interest personal loan.
If Hollande wins a second-round election May 6, economists fear those steps would upset France’s delicate cooperation with Germany that has been key to Europe’s efforts to resolve its financial crisis.
U.S. stocks rose Friday on the back of stronger profits from Microsoft, McDonald’s and other major U.S. corporations.
The Dow Jones industrial average rose 0.5 percent to close at 13,029.26. The Standard & Poor’s 500 index rose 0.1 percent to 1,378.53. The Nasdaq composite index fell 0.2 percent to 3,000.45.
In energy trading, benchmark oil for June delivery was down 13 cents to $103.75 a barrel Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.16 to settle at $103.88 in New York on Friday.
The euro fell to $1.3187 from $1.3215 late Friday in New York. The dollar fell to 81.27 yen from 81.58 yen.
Concerns about the economy pushed oil prices lower on Monday.
West Texas Intermediate, the U.S. benchmark crude, gave up 85 cents to end at $102.46 per barrel. Brent crude, which is used to price oil imported by U.S. refineries, fell by 76 cents to finish at $122.67 per barrel.
The U.S. economy added just 120,000 jobs in March _ half as much as each of the previous three months. The government reported the disappointing data on Friday, but Monday was the first day oil markets could react. Stocks also fell.
Analysts said the slower pace of hiring could be a symptom of a weakening economy. It also hints at a slowdown in gasoline usage.
Iran also weighed on oil markets. OPEC’s No. 2 oil producer agreed to hold talks about its nuclear program with the West starting Friday. That eased fears of a prolonged standoff that could further squeeze world oil supplies. Already, international sanctions have forced some of the biggest importers of Iranian oil to find other sources.
Renewed negotiations could lead to an agreement that lifts those sanctions. The talks also reduce the risk, for now, that Iran will try to choke off exports from other oil producers by closing shipping routes out of the Persian Gulf guaranteed approval cash loans.
Concerns about a prolonged standoff with Iran have added about $13 to $14 to the price of a barrel of oil, independent analyst Jim Ritterbusch said. Oil should fall further if Iran works with the West, although Ritterbusch expects the price to remain elevated “for months to come.”
“As long as the regime stays in place, the nuclear threat is always going to be there,” he said.
In the U.S., gasoline prices fell by about a penny over the weekend to $3.927 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices have eased after nearing $3.94 a gallon last week.
Experts still say that prices could peak this month between $4.25 and $4.35 per gallon.
In other energy trading, heating oil fell by 2.33 cents to $3.1459 per gallon while gasoline futures fell by 4.38 cents to finish at $3.2967 per gallon. Natural gas added 1.8 cents to end at $2.107 per 1,000 cubic feet.
Service producers are taking over from manufacturing as the driver of the almost three-year-old U.S. expansion.
The end of the recession in June 2009 triggered the biggest surge in production in a decade, propelled by rising demand from overseas and the need to replenish inventories and upgrade equipment. That is now giving way to increasing sales at places like restaurants, transportation companies and temporary-help agencies, leading to gains in employment that have bolstered the world
Spanish stocks are the only developed market suffering losses this year as Prime Minister Mariano Rajoy fails to rein in the budget deficit fast enough to assure investors.
A few members of the Federal Open Market Committee meeting said the central bank may soon have to consider more asset purchases, while others said the economic outlook would have to deteriorate first.
A few members said economic conditions
Rising demand for automotive-related products helped Viasystems Group Inc., a provider of printed circuit boards, to a fourth-quarter profit of $15.5 million, or 74 cents per share, compared with $9.5 million, or 44 cents a share, a year ago. Sales grew 10.3 percent, to $269 million, from the corresponding period the previous year. Demand for the Clayton-based company’s products by automotive users continued an upward trend from last year.
EDITOR’S NOTE: Story as updated to correct partner’s name in headline.
Phone company Verizon Communications Inc. will challenge Netflix and start a video streaming service this year with Redbox and its DVD kiosks.
Verizon and Coinstar Inc., Redbox’s parent company, said Monday that the service will be national and available to non-Verizon customers as well. It adds another dimension to Verizon’s quest to become a force in home entertainment.
Unlike competing services from Amazon.com Inc. and Wal-Mart Stores Inc., the new service will combine Internet delivery of movies with DVDs, the way Netflix does. Dish Network Corp. also offers a similar bundle through its Blockbuster subsidiary.
Details and pricing of the new plan weren’t announced.
Late last year, the companies were shopping around a $6-per-month offering that would give subscribers one DVD rental from Redbox per month as well as unlimited streaming of a certain selection of movies, according to a person briefed on the plan then. The person was not authorized to speak publicly and spoke on condition of anonymity business card.
It’s not known whether the plan has changed since then, though the price is likely to be less than the $16-a-month minimum that Netflix subscribers have to pay for a combined DVD-by-mail and streaming plan.
Although consumers would pay less, Redbox’s inventory is limited to what’s in its kiosks, compared with Netflix’s library of more than 100,000 titles, including more obscure fare. Redbox customers will also have to go in person to pick up a disc, which saves the company mailing costs.
Getting an extensive library of streaming content to rival Netflix’s 20,000-plus titles will be expensive. The rising cost for streaming rights is the main reason that Netflix raised its U.S. prices by as much as 60 percent last year in a move that triggered a customer backlash.
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