Wednesday, June 9, 2010

Wall St flat as euro-zone worries offsets Bernanke

Chuck Mikolajczak

: Wall Street was flat in choppy trade on Tuesday, June 8 after relinquishing early gains, as euro-zone concerns offset reassuring comments from Federal Reserve Chairman Ben Bernanke on the state of the US economy.

Bernanke said the US economy seemed to have enough momentum to avoid a "double-dip" recession, while European leaders were committed to ensuring the survival of the euro and had enough money to meet obligations of heavily indebted member nations.

Financial markets remained anxious about debt levels in several euro zone countries, as Portugal, Italy and Spain prepared to sell new bonds this week. It will be the first sale by Spain since a credit ratings downgrade.

"What is happening here is that the worries in Europe tend to be top of mind for traders and investors. It's the first thing they think about and not the second or third thing, so there is nothing positive that can balance it out as this point," said Richard Sparks, senior equities analyst, Schaeffer's Investment Research in Cincinnati, Ohio.

"Until we have some clarity there and there is some better news that can overcome the worries of the unknown, it will be really tough for traders to have the confidence to step in convincingly and buy this market."

The Dow Jones industrial average dropped 10.20 points, or 0.10%, to 9,806.29. The Standard & Poor's 500 Index fell 1.80 points, or 0.17%, to 1,048.67. The Nasdaq Composite Index slipped 16.69 points, or 0.77%, to 2,157.21.

The euro, used by investors in recent weeks as a barometer for euro-zone stability, edged up 0.2%, a day after the currency hit its lowest level against the dollar since early 2006.

The increased volatility on Wall Street in recent weeks has made investors more sensitive, backing away at the first hint of selling pressure.

Large-cap TECHNOLOGY [] companies dragged the Nasdaq lower after Bank of America-Merrill Lynch cut price targets on seven Internet stocks, citing uncertainty over earnings due to an appreciating dollar since April. Inc was off 2.8% to $118.57.

Goldman Sachs Group Inc shed 1.5% to $136.60 after it was subpoenaed by the commission probing the financial crisis.

Separately, Goldman lowered its view on the deepwater drilling sector to "neutral" from "attractive" on expectations the moratorium on deepwater drilling would be extended and bring pressure on day rates and delayed price hikes.

US-listed shares of Transocean Ltd slid 9% to $44.72, while Diamond Offshore Drilling Inc dropped 5% to $56.20.

McDonald's Corp dipped 0.8% to $66.25 after the fast-food chain reported a stronger-than-expected rise in worldwide same-store sales in May. ' Reuters

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