Wall Street ended unchanged on Tuesday, failing to bounce back from its worst day in two months, as a mixed housing report and successful Treasury auction failed to jolt the bulls from their recent slumber.
Today’s Markets
The Dow Jones Industrial Average fell 16.10 points, or 0.19%, to 8322.91, the Standard & Poor's 500 rose 2.06 points, or 0.23%, to 895.10 and the Nasdaq Composite lost 1.27 points, or 0.07%, to 1764.92. The consumer-friendly FOX 50 advanced 0.11 points, or 0.02%, to 662.65.
Tuesday’s lethargic session failed to stem the bearish tide that has reemerged on Wall Street in recent days amid concerns stocks have gotten ahead of the still-weak U.S. economy. It’s clear the markets are no longer red hot but what’s less certain is whether this is a minor decline from recent highs or the beginning of something more painful.
“We’re in a pullback phase but you still have a lot of capital that’s looking to get into the market,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald. “It’s nothing close to testing the March lows, when there were all these fears of nationalizing the banks. All of that stuff is behind us at this point. We’re now looking for when the recovery will start and how strong it will be.”
The Dow was led by AT&T (T) and Caterpillar (CAT). On the downside, the index's biggest percentage losers were Home Depot (HD) and Boeing (BA), which announced another delay for its 787 Dreamliner.
The blue-chip index is still well above its March low but recent selloffs have erased a chunk of its 2,000-point surge, including 200 points on Monday alone. Some traders are worried the very low trading volumes that have become the norm over the past several week signal more trouble to come.
“It says the market’s not healthy and we’re going to pull back. The trend is definitely much lower than we are now. It’s a question of how fast we’re going to get there,” NYSE trader Ben Willis of VDM Institutional Brokerage told FOX Business, pointing to 850 on the S&P as the next level of support.
The focus on Wall Street has now shifted to the Federal Reserve’s two-day policy meeting as the markets failed to move on a mixed report on new home sales and the start of the Treasury’s $104 billion weekly spending spree. While virtually no one expects the central back to boost interest rates Wednesday from their unprecedentedly low levels, the markets will be looking to see if the Fed offers any hints of an exit strategy.
Markets Yawn at Auction, Housing Data
Wall Street had little reaction to the Treasury's $40 billion auction of two-year notes, which saw the heaviest demand since Sept. 2007 and strong buying from foreign investors. Even though bond markets rallied on the sale, Wall Street remains cautious as the government still has two more auctions this week, which will see a record $104 billion of note sales. Bond auctions in recent weeks have raised fears that higher interest rates will hamper an economic recovery.
The auction came after Moody’s reaffirmed the U.S. government’s “AAA” credit rating but said the coveted rating could be at risk if public debt doesn’t return to a downward trajectory, Reuters reported.
On the economic front, the National Association of Realtors said new home sales increased by a weaker-than-expected 2.4% in May. While inventories dropped to 9.6 months of supply, the industry group said median new home prices plunged 17% from a year ago, putting further pressure on the depressed housing market.
Energy stocks rebounded from their steep selloff on Tuesday, mirroring the bounce back for crude oil. Thanks to a plunge in the greenback, crude ended at $69.64 a barrel, up $1.74, or 2.58%.
Corporate Movers
Boeing (BA) postponed the first flight of its long-awaited 787 Dreamliner for the fifth time because of structural problems. The aerospace giant, which gave no new timetable for the flight, saw its shares tumble on the latest delay
Google’s (GOOG) Android operating system will launch on Verizon (VZ) and Vodafone’s (VOD) Verizon Wireless and T-Mobile before the end of the year, The Wall Street Journal reported. The Google phones, which are manufactured by Motorola (MOT), will face competition from Apple’s (AAPL) iPhone.
UBS (UBS) rose sharply after The New York Times reported the Justice Department may drop its attempt to force the Swiss bank to disclose the identities of more than 50,000 Americans suspected of offshore tax evasion. The case reportedly could be dropped before a July 13 trial on the matter. However, the Justice Department said there is "no basis" for the report.
Ford (F) is set to receive $5.9 billion in government loans to retool its factories to produce more fuel efficient vehicles, the Energy Department announced. The auto maker will be joined by Nissan (NSANY) and Tesla in becoming the first to receive the government financing.
Boston Scientific (BSX) said a new trial met its primary goal by showing that CRT defibrillators significantly reduced death or heart failure interventions compared to cheaper devices.
Goldman Sachs (GS) received a boost from analysts at FBR Capital Markets, who boosted their earnings outlook and price target on the bank, citing increased market share. FBR now sees a second-quarter loss for Goldman rival Morgan Stanley (MS) due to TARP repayment and more commercial real-estate losses.
Intel (INTC) unveiled a new deal to sell mobile device chips to Nokia (NOK) as the chip maker attempts to enter the phone market.
Global Markets
European markets ended mixed as London's FTSE 100 sank 0.1% to 4230.02, France's CAC 40 dropped 0.21% to 3116.82 and Germany's DAX jumped 0.29% to 4707.15.
In Asia, Japan's Nikkei 225 lost 2.82% to 9549.61 and Hong Kong's Hang Seng dropped 2.89% to 17538.37.
