U.S. Stocks Pare Losses to Finish Modestly Lower
06/28/2012| 07:15am US/Eastern
--Major benchmarks snap two-session streaks of gains
--Stocks pare declines late in the session to finish modestly lower
--Traders cite reports of progress in Europe's debt talks for late turnaround
NEW YORK--Major benchmarks trimmed sharp declines in the final hour of trading to finish modestly lower as optimism for possible aid to debt-strapped European countries cut into losses that followed another weak round of U.S. economic data and the Supreme Court's health-care decision.
The Dow Jones Industrial Average fell 24.75 points, or 0.2%, to close Thursday at 12602.26, snapping a two-session streak of gains for the blue-chip index.
The Standard & Poor's 500-stock index declined 2.81 points, or 0.2%, to 1329.04, while the Nasdaq Composite lost 25.83 points, or 0.9%, to 2849.49.
Stocks opened lower, then extended declines after the court said Congress was acting within its powers under the Constitution when it required most Americans to carry health insurance or pay a penalty.
The Dow was down as many 177 points with around 90 minutes remaining, but Thursday's losses faded late in the session. Reports of progress in European debt talks circulated early in the afternoon, but traders said they seemed to gain traction as the session came to a close. Leaders of Germany, Spain, Italy and France on Thursday convened for a two-day summit in Brussels to discuss more aggressive options to combat the Continent's debt issues.
Other market watchers pointed to a large purchase of S&P 500 futures less than 30 minutes before the close for pushing up stocks.
"Clearly, someone is buying the market," said Michael Shea, managing partner of institutional sales and trading at Direct Access Partners.
J.P. Morgan Chase dropped 90 cents, or 2.5%, to $35.88 and led the Dow's declines after the New York Times reported, citing unnamed sources, that the company's losses from credit derivatives may reach $9 billion, more than four times initially estimated.
Technology stocks were Thursday's biggest declining sector in the S&P 500, as Cisco Systems dropped 25 cents, or 2.1%, to 16.48.
The court's ruling jostled stocks across health-care sector. Managed-care providers slumped as the law keeps in place requirements for insurers to cover people regardless of health history. Analysts say could it could pressure earnings. WellPoint, Aetna and Cigna all slumped more than 2%.
But the ruling was a boon for shares of hospital providers, which are positioned to reap the gains because the law promises coverage of those who might not otherwise seek care. HCA Holdings, THC Healthcare and Community Health Systems all surged more than 5%.
Medicaid-focused insurers also jumped, as the health-care law should extend the federal-state partnership designed to provide a health coverage for the poorest Americans to millions more people. Wellcare Health Plans, Molina Healthcare and Amerigroup leapt more than 4%.
Angst over the court's ruling came after further evidence that U.S. economic growth is stalling. Weekly jobless claims fell slightly more than expected last week, though the prior week's figure was revised higher. Separately, a reading on June manufacturing activity showed that a broad swath of the Western U.S. was more sluggish than expected.
"The numbers definitely have been softer than expected over the last few months, and these are yet more signs of that," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank.
European stocks were on the defensive as the summit convened, and the Stoxx Europe 600 index dropped 0.5%.
Asian stocks gave back parts of an initial advance to end mixed. Japan's Nikkei Average rose 1.7%, while Hong Kong's Hang Seng Index fell 0.8%, and the China Shanghai Composite fell 1%.
Crude oil futures fell 3.1% to settle at $77.69 a barrel, while gold futures dropped 1.8% to settle at $1549.70 a troy ounce. The U.S. dollar edged higher against the euro, but fell against the yen. The yield on the benchmark 10-year Treasury bond fell to 1.575%.
In other corporate news, News Corp. fell 32 cents, or 1.4%, to 21.99 after the media conglomerate's board authorized a plan to explore the separation of its entertainment operations, which include 20th Century Fox and Fox News Channel, from its publishing assets, which include The Wall Street Journal and HarperCollins. News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal and this newswire.
Family Dollar Stores fell 1.93, or 2.8%, to 67.20 after the company's quarterly results fell slightly short of analysts' expectations, and the dollar-store chain narrowed its full-year earnings guidance.
Facebook dropped 87 cents, or 2.7%, to 31.36 a day after research analysts at banks that worked on Facebook's initial public offering published their initial views on the social network, which were more mixed than some expected.
Software company Exa declined 20 cents, or 2%, to 9.80 after pricing its shares lower than expected. The company's stock opened at $10 a share on the Nasdaq, flat with its initial public offering price of $10.
Biopharmaceutical firm Tesaro rose 19 cents, or 1.4%, to 13.69 on its first day of trading. The company's shares opened at $14 up from its IPO price of $13.50.
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