Stocks Finish Weaker on News of German Short Ban

Stocks started to hit session lows on reports that Germany will curb naked short-selling on 10 banks and on eurozone bonds and CDS. Gregg Greenberg has The Real Story.
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NEW YORK (

TheStreet

) -- Stocks took another tumble Tuesday despite strong earnings from

Wal-Mart

(WMT) - Get Report

, as shares across the technology and financial spaces weakened, the euro gave up earlier gains, and reports began to swirl that Germany is making plans to curb naked short-selling on certain wagers.

The

Dow Jones Industrial Average

, which flitted above and below the flat line today, finished 115 points lower, or 1.1%, to 10,511. The

S&P 500

shed 16 points, or 1.4%, at 1121, and the

Nasdaq

plunged by 37 points, or 1.6%, at 2317.

The

euro weakened as European markets closed. Earlier Tuesday, Greece received an estimated 14.5 billion euros to cover debt that comes due Wednesday.

In the afternoon, reports began circulating that

Germany will place restrictions on naked short-selling on euro bonds and some stocks. The German press is reporting that the BaFin financial services regulator will enact the ban at midnight tonight, and that restrictions on CDSs are included.

Overseas, Hong Kong's Hang Seng gained 1.2%, and Japan's Nikkei rose 0.07%. The FTSE in London was gained 0.9%, and the DAX in Frankfurt added 1.5%.

The Economy

The Labor Department said

prices at the wholesale level fell 0.1% in April, compared with growth of 0.7% in March. The level was lower than the uptick of 0.1% that economists had been anticipating. Excluding volatile food and energy prices, April's producer price index showed a gain of 0.2%, rising from a 0.1% uptick the previous month. Economists had expected core wholesale prices to increase by 0.1%.

The Department of Commerce said

housing starts rose 5.8% to 672,000 in April, exceeding analysts' estimates of 655,000. That compares to 635,000 starts in March. Buidling permits, meanwhile, came in at 606,000 in April, which was much lower than the 680,000 permits that Wall Street had been projecting. April permits slipped 11.5% from March's level of 685,000.

"Housebuilding accelerated in April, riding the wave of housebuying ahead of the now-expired homebuyers' tax credit. However, with permits slumping in April, it looks like homebuilding will ride the home sales wave back down as new home sales wane in mid-summer," said PNC chief economist Stuart Hoffman.

"The best anecdote for slumping sales and starts is sustained job creation, which not only increases income but also requires relocations," Hoffman added.

At 4:30 p.m. EDT, the American Petroleum Institute will issue its weekly read on inventory levels. Analysts polled by Platts are looking for an increase of 950,000 barrels in crude oil supplies in the week ended May 14.

Lawmakers on Capitol Hill were questioning Interior Secretary Ken Salazar today over the administration's response to the

BP

(BP) - Get Report

oil leak in the Gulf of Mexico.

Company News

After the closing bell,

Hewlett-Packard

(HPQ) - Get Report

posted second-quarter earnings of $1.09 a share, beating consensus estimates provided by Briefing.com calling for $1.05 a share, while also beating topline estimates on a 13% year-over revenue growth. The computer manufacturer, which also raised its outlook, was moving higher in extended trading after declining 1.2% in the regular session.

The technology sector was one of the session's worst-performing sectors.

Intel

(INTC) - Get Report

was one of a group exerting the most pressure on the Dow, and

Cisco Systems

(CSCO) - Get Report

and

Microsoft

(MSFT) - Get Report

weren't far behind.

As a group, financials also weighed on the major market averages more than most, as the KBW Bank index slipped 3.7%. Shares of

American Express

(AXP) - Get Report

were the biggest drag on the Dow, sliding 3.4%, while

Bank of America

(BAC) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

tumbled 2.5% and 2.1%, respectively.

Wal-Mart

(WMT) - Get Report

was the Dow's best performer and the only blue chip finishing in positive territory, with shares gaining 1.8%, to $53.70. Wal-Mart topped analysts' profit estimates with first-quarter earnings of 88 cents a share but offered guidance for second-quarter earnings that only met expectations on the top end.

Pharmaceutical company

Pfizer

(PFE) - Get Report

said it will cut 6,000 jobs at plants in Ireland, Puerto Rico and the U.S. by the end of 2015 as part of its integration with Wyeth.

Home Depot

(HD) - Get Report

said first-quarter earnings rose 41% to $725 million, or 43 cents a share, as sales rose 4.3% to $16.9 billion. Analysts surveyed by Thomson Reuters expected earnings of 40 cents on revenue of $16.4 billion. The stock lost 86 cents, or 2.4%, to $34.73.

T. J. Maxx parent company

TJX

(TJX) - Get Report

reported first-quarter earnings that more than doubled, beating Wall Street's expectations with a profit of 80 cents a share. The discount retailer's second-quarter earnings guidance, however, only met analysts' expectations on the high end of its range. Shares slipped by 3.5%, at $43.68.

Vodafone

(VOD) - Get Report

said earnings for the fiscal year rose to 8.65 billion pounds ($12.49 billion) from 3.08 pounds in the previous year. The stock fell off by 53 cents, or 2.6%, at $19.54.

Commodities and the Dollar

Crude oil for June delivery finished below the $70 mark for the first time this year, slipping 67 cents to settle at $69.41 a barrel.

Elsewhere in commodity markets, the June

gold contract fell by $13.50 to settle at $1,214.60 an ounce.

The dollar was trading higher against a basket of currencies, with the

dollar index up by 1.1%.

Treasuries

The benchmark 10-year Treasury rose 31/32, lowering the yield to 3.378%.

The two-year note gained 4/32, diluting the yield to 0.749%. The 30-year bond increased 1 27/32, weakening the yield to 4.255%.

--Written by Melinda Peer and Sung Moss in New York

.