Stocks Slip on Greece Uncertainty
NEW YORK (TheStreet) -- U.S. stocks slipped Wednesday following weak manufacturing reports from overseas and uncertainty over whether Greece can implement its debt deal.
The Dow continued its retreat from Tuesday when it reached 13,000 on an intraday basis for the first time since May 2008. Corporate earnings season is also drawing to an end, removing some potential headline momentum from the market.
"It is going to be tougher to find positive catalysts since we can't rally endlessly on each new rumor that Greece is saved," noted James "Rev Shark" DePorre, founder and CEO of Shark Asset Management.Following a tepid welcome for news of a €130 billion bailout package for Greece Tuesday, a drop in a reading on European manufacturing activity underscored the region's longer term challenge of how to pull itself out of what is likely to be years of slow growth. According to Markit Economics, eurozone business activity dipped to a level of 49.7 in February from 50.4 in January. Analysts had expected the reading to remain just above 50 to indicate economic expansion, not contraction. The Markit Economics' purchasing managers index measuring China's manufacturing activity came in at 49.7 in February, rising marginally from 48.8 in January. "Growth remains on track of slowdown, despite the marginal improvement in [Chinese manufacturing] led by quickened production after the Chinese New Year," said Hongbin Qu, chief economist at HSBC. "With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth." In U.S. economic news, existing-home sales rose to their highest rate in January since May 2010. Last month's sales increased 4.3% to an annual rate of 4.57 million, according to the National Association of Realtors (NAR). Investors welcomed the report as a sign of improvement in the housing market, even though economists were looking for an annual rate of 4.65 million. December's pace was downwardly revised to 4.38 million from 4.61 million. "The uptrend in home sales is in line with all of the underlying fundamentals -- pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents," noted Lawrence Yun, chief economist at the NAR. "Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets." With no major developments coming out of Greece on Wednesday, investors remained cautious on the country's ability to implement the deal struck earlier this week. Before the country gets bailout money, it needs to complete a swap of private debt holdings by March 10. Fitch Ratings, which downgraded Greece's long-term foreign and local currency issuer default ratings to C from CCC on Wednesday, has said it may slash the country's rating again to "restricted default" once the country's private creditors accept the bond swap. Germany's DAX finished lower by 0.93% while London's FTSE slid 0.2%. Japan's Nikkei Average settled up 0.96% and Hong Kong's Hang Seng finished up 0.33%.
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