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Dow Drops for Fourth Straight Session


NEW YORK (TheStreet) -- The major U.S. stock averages were dragged lower Wednesday by more uncertainty in the eurozone as both Greece and Spain dealt with anti-austerity protests.

The Dow Jones Industrial Average fell 44 points, or 0.33%, to close at 13,414. The blue-chip index has now lost ground in four straight sessions and is up 9.79% in 2012.

Within the Dow, losers outnumbered winners, 22 to 8. The sharpest decliners were American Express (AXP), Bank of America (BAC), Travelers (TRV) and Walt Disney (DIS).

Shares of IBM (IBM) finished slightly lower following a Wall Street Journal report that the company plans to ramp up its efforts to sell cloud computing services to mid-size businesses.

Also, Big Blue announced after Tuesday's closing bell that CEO Virginia Rometty is succeeding Sam Palmisano as chairman. Palmisano, Rometty's predecessor as CEO, will remain a senior adviser to the company. Shares closed down 0.40%.

The biggest gainers included Alcoa (AA), Boeing (BA) and Hewlett-Packard (HPQ).

The S&P 500 lost more than 8 points, or 0.57%, at 1433, while the Nasdaq fell more than 24 points, or 0.77%, at 3094.

The weakest sectors in the broad market were technology, consumer cyclicals and energy. Utilities were the only group to finish in the green.

The lingering uncertainty about Europe comes with market watchers wondering when Spain will officially request a bailout.

"I think they're holding off for the most money they can possibly get and the greatest amount of fiscal support with probably making the least amount of changes in economic reform," said Marian Kessler, a co-portfolio manager at Becker Value Equity Fund.

"A lot of the EU is looking very closely at how the situation's handled with Greece," Kessler continued. "Greece has got a very small GDP, but it's in worse shape than the IMF thought. How the EU, now that it's stuck with this problem handles it will be really indicative of how Italy and Spain proceed."

The worries were compounded by a general, anti-austerity strike in force in Greece as the government tries to hash out the details of a new budget with troika officials this week, and by protestors in Spain clashing with police a day earlier in Madrid, demanding the dissolution of parliament as the Spanish government prepares to announce the 2013 budget Thursday.

"I think there is a significant and really real resentment of Northern Europe towards Southern Europe in work hours, willingness to adopt economic austerity programs and reform programs as needed," Kessler added. "There's going to be more trouble, more dissention out of the EU, I think, in the years to come."

Also adding to investor stress was news the important Spanish region of Catalonia has called for a snap election in November in order to be given more autonomy in handling its finances. Spanish 10-year bond yields ramped back above 6%.

The unrest spreading across Europe and an "all-quiet" response from the region's politicians "has given rise to the first real risk-off trade since (Mario) Draghi promised whatever it takes," said Richard Gilhooly, U.S. director of interest rate strategy at TD Securities.

In domestic news, the Census Bureau reported Wednesday that new-home sales fell 0.3% to a seasonally adjusted annual rate of 373,000 in August from the upwardly-revised July rate of 374,000, but is up 27.7% from the same time last year. Economists were expecting an August rate of 380,000.

Sales were especially tepid in the South, which was the only region to see an overall decline in new home sales. Across the nation, average and median prices increased about $25,000.

"While the pace of sales was somewhat disappointing, the sharp acceleration in prices suggests that the dwindling supply of new homes has shifted the scale in favor of homebuilders, who appear to be more willing to accept slower sales for higher prices," said Millan Mulraine, an economic strategist at TD Securities. "Taken in the context of the other positive housing market indicators, there are increased signs that the housing recovery is now on a more sustainable path, though its impact on overall economic activity will remain relatively modest at best over the near-term."

The major U.S. stock averages suffered steep losses Tuesday after Philadelphia Fed President Charles Plosser said he believes it's unlikely the central bank's third round of quantitative easing will meaningfully boost the economy.

The FTSE in London finished down 1.56% and the DAX in Germany settled off 2% on Wednesday. Hong Kong's Hang Seng index closed down 0.83% and the Nikkei in Japan settled behind by 2.03% as territorial tensions between China and Japan continued to escalate.

The benchmark 10-year Treasury rose 17/32, diluting the yield to 1.616%. The greenback spiked 0.24% higher, according to the dollar index.

November crude oil futures fell $1.39 to settle at $89.98 a barrel, whileDecember gold futures plunged $12.80 to settle at $1,753.60.

In corporate news, Jabil Circuit (JBL), the electronics manufacturing services company, missed Wall Street's expectations Tuesday in its latest quarterly results and issued a weak first-quarter forecast. The stock dropped 9.9%.

Research In Motion (RIMM) shares gained 6% after Goldman Sachs hiked its forecasts on the stock in reflection of an unexpected rise in the company's subscriber base, revealed at a conference on Tuesday.

Alpha Natural Resources (ANR) shares increased 0.76% even as the poorly performing coal supplier stock gets replaced by Kraft Foods Group (KRFTV) in the S&P 500 following Kraft Foods' (KFT) completion of its split into two entities. Alpha Natural Resources shares had been slumping earlier in the session.

Blyth (BTH) shares plunged 21.2% after its ViSalus nutritional supplement division withdrew its proposed IPO citing uncertain market conditions.

Bookseller Barnes & Noble (BKS) rolled out its new Nook HD line on Wednesday. The new Nook HD will come in two sizes, one with a 7-inch screen, starting at $199, and one with a new 9-inch diagonal screen, called the Nook HD+, starting at $269. Shares tacked on 6%.

American Greetings (AM) has received a buyout offer of $17.18 a share from its CEO and chief operating officer. Shares popped 17.3%.

Sucampo Pharmaceuticals (SCMP) shares jumped 4.2% after the company said that the U.S. Food and Drug Administration has granted priority review of its supplemental new drug application filing on its Amitiza treatment of opioid-induced constipation in patients with chronic, non-cancer pain.




--Written by Andrea Tse in New York.



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

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