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TheStreet Open House

Stocks Close Mixed on Greece Bailout Questions


NEW YORK (TheStreet) -- Stocks posted a mixed close Tuesday as the Dow pulled off the 13,000 mark and the market gave Greece's second bailout package a tepid reception.

The Dow Jones Industrial Average added 16.2 points, or 0.1%, at 12,966, after breaching the psychologically significant level of 13,000 for the first time since May 2008. Twenty two of the 30 blue-chip components rose, with Alcoa (AA), Kraft (KFT) and Caterpillar (CAT) leading gains. Wal-Mart (WMT), Travelers (TRV) and Merck (MRK) were the biggest laggards.

The S&P 500 finished up 1 point, or 0.07%, at 1362. The Nasdaq slipped 3.2 points, or 0.1%, to 2948.

"The escalation of commitments is enough to create momentum in equities," says Michael Gayed, chief investment strategist at Pension Partners, who notes that the markets have been sensing a "dramatic shift" to the return of inflation expectations -- paving the way for conditions conducive to a stock rally.

"The poor [treasury inflation-protected securities] auction of last week was indicative of the idea that investors now may see stocks as the inflation hedge."

"There's a direct connection between volatility and deflation scares," he said. But, "none of this happening [today]."

Over the extended President's Day weekend in the U.S., European finance ministers scrambled to consolidate a debt rescue plan needed to prevent Greece from defaulting on more than €14 billion in bond redemptions due on March 20. Although the €130 billion ($173 billion) package was finalized after more than 13 hours of talks in Brussels, concerns remained about the support for the plan.

The package requires that the majority of private sector investors of Greek debt accept more than a 53% write-down on the value of their holdings, which would cut down the country's debt by roughly €100 billion. The deal also relies on the amount of contributions that the International Monetary Fund is willing to provide. If the implementation of the deal goes according to plan, Greece will cut debt to 121% of its gross domestic product by 2020, which may strain an economy already in its fifth year of recession.

"Based on the action of global markets, it appears a bit of 'sell the news' is in order, but risk assets have experienced quite the rally over the last several weeks," said Dan Greenhaus, chief global strategist of BTIG. "More importantly though, we once again note that while some may be inclined to cheer this agreement, a debt level equivalent to 120% of your GDP is anything but something to be cheered."

Germany's DAX settled down 0.58% while London's FTSE closed lower by 0.29%. Japan's Nikkei Average closed lower by 0.23% and Hong Kong's Hang Seng closed up 0.25%.

In corporate news, Wal-Mart, the world's largest retailer, missed analyst expectations in the fourth quarter as lower prices cut into margins. The retailer posted net income for the quarter ending Jan. 31 of $1.50 a share, 15% lower than the period a year earlier. Profit, excluding some items, came in at $1.44, slightly off the forecast for $1.45 a share. Revenue grew to $122.28 billion, also off the forecast of $124.21 billion. Shares tumbled 3.9% to $60.07.

Goldman Sachs (GS) shares were up 0.5% at $116.52 after Fortune reported, citing anonymous sources, that chief executive officer Lloyd Blankfein may step down from the firm as early as this summer and would likely be replaced by chief operating officer Gary Cohn. The board wishes to see more changes at the top as the firm tries to restore its once spotless reputation following widespread accusations of its fraudulent sale of mortgage-linked securities. Shares were up 0.6% to $116.63.

Home-improvement giant Home Depot (HD) beat estimates, helped by a rise in residential spending due to warmer weather. The company reported 50 cents a share in net income on revenue of $16 billion. Analysts forecast 42 cents a share in the fiscal fourth quarter on sales of $15.5 billion. Shares edged 0.5% higher to $46.92.

Kraft Foods (KFT) reported fourth quarter net income of 47 cents a share and earnings, excluding items, of 57 cents a share, on revenue of $14.7 billion. Results slightly were in line with analysts' estimates of 57 cents a share on revenue of $14.79 billion. The stock was down 0.2% to $38.57.

Medco Health Solutions (MHS) handily beat estimates with a 12% jump in fourth quarter profit to $1.08 a share, or $424.4 million, on net revenue of $19 billion. Analysts were looking for $1.17 a share on revenue of $17.45 billion. Shares were down 1.3% to $63.19.

Wynn Resorts (WYNN) shareholder Kazuo Okada will fight the casino company's decision to forcibly buy out his stake in the company. Okada will "take all legal actions necessary to protect its investment and prevent" Wynn from cutting ties with him, said a statement from Okada's Universal Entertainment Corp., The Associated Press reported. Okada is Wynn's biggest shareholder. On Sunday, Wynn Resorts said an investigation found that he had made improper payments to foreign gaming regulators. Shares popped 6% to $119.40.

Rail company CSX (CSX) has been downgraded to neutral from overweight by JP Morgan, who says earnings will be hurt by lower coal volume. Shares fell 2% to $21.15.

April oil futures rose $2.65 to $106.25 a barrel after Iran stopped selling its crude to the United Kingdom and France. In other commodities, April gold futures added $32.60 to $1,758.50 an ounce.

The dollar index was off 0.2% at $78.99. The benchmark 10-year Treasury was sliding 19/32, raising the yield to 2.071%.

There are no major economic reports scheduled for Tuesday.

-- Written by Andrea Tse and Chao Deng in New York.



>To contact the writer of this article, click here: Andrea Tse.

>To follow the writer on Twitter, go to http://twitter.com/atwtse .

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