Stocks Close Lower on More Greek Bailout Woes


NEW YORK (TheStreet) -- Stocks closed lower Wednesday as reports that Greece's creditors are delaying the country's bailout eclipsed news that China may provide financial support to the eurozone.

The Dow Jones Industrial Average lost 97.3 points, or 0.8%, to close at 12,781, as it suffered its worst day since Dec. 28. The S&P 500 slipped 7.3 points, or 0.5%, at 1343. The Nasdaq was off 16 points, or 0.6%, at 2916 as Apple ( AAPL) shares lost momentum.

Finance ministers in Europe are withholding bailout aid to Greece even after the country's parliament passed a slate of unpopular austerity measures. Greece's creditors canceled a meeting originally scheduled for Wednesday in Brussels, saying that they were not confident Greece's government would follow on its promises after elections in April. The ministers will hold a teleconference instead.

Greece's creditors are now considering giving the country special bridging loans before releasing full aid once a new government is elected. The short term loans would help Greece cover 14.4 billion euro in bond redemptions due March 20 and avoid a default in the short term.

Meanwhile, the People's Bank of China has said that China may be able to help Europe through the central bank and its sovereign bailout fund, according to a report from Bloomberg. The governor of the bank, Zhou Xiaochuan, said that Europe's problems are solvable.

Germany's DAX closed up 0.61% while London's FTSE was down 0.08%. Japan's Nikkei Average settled up 2.3% and Hong Kong's Hang Seng gained 2.1%.

The market was struggling to gain solid footing even after Federal Reserve officials offered some upbeat commentary about the economy in the minutes from their last open market committee meeting, released this afternoon.

"Generally speaking the Fed sounds somewhat upbeat on the economy, noting that consumer spending is expanding, credit conditions have been improving and indicators of stress have eased," said Dan Greenhaus, chief global strategist at BTIG. "The probability of a QE3 program is lower today than it was in December."

At the same time, most members agreed that overall economic conditions still require an exceptionally low federal funds rate level at least through late 2014.

In other economic news, a reading on U.S. industrial production remained unchanged after gaining 0.4% in the previous month. Economists had expected a slight rise. Capacity utilization, however, rose to 78.5, higher than the 78.2 anticipated and an improvement from 78.1 in the prior month.

The Empire State manufacturing index for February came in at 19.53, beating the expectation for 15, according to the consensus by Thomson Reuters, rising from 13.5 in January.

Home builder confidence rose for a fifth straight month in February, according to the National Association of Housing Builders. The firm's housing market index rose to 29, the highest level in more than four years, beating the anticipated reading of 26. The index registered at 25 in January.

In corporate news, food company Kellogg ( K) will be buying the Pringles brand from Procter & Gamble ( PG) for $2.7 billion after Diamond Foods' ( DMND) plans to buy the brand fell through days after the company announced that it was replacing its CEO and chief financial officer on the findings of serious accounting errors. Kellogg shares gained 5.1% to $52.87. P&G shares were up 0.1% to $64.55. Diamond Food shares added 5.2% to $23.46.

Comcast ( CMCSA) the nation's biggest cable-television company and the majority owner of NBC Universal, reported fourth-quarter earnings of 47 cents a share on revenue of $15.04 billion, beating the average analyst estimate of 41 cents a share on revenue of $14.94 billion. The company also raised its dividend 44% to 65 cents a share and its board approved a share repurchase program of $6.5 billion. Shares jumped 4.7% to $28.52.

Farm equipment maker Deere ( DE) reported first-quarter earnings of $532.9 million, or $1.30 a share, up from $513.7 million, or $1.20 a share, the same time last year. Analysts polled by Thomson Reuters were expecting earnings of $1.24 a share. Shares fell 5.4% to $84.28.

Warren Buffett's faith in IBM ( IBM)and Intel ( INTC)deepened during the last few months, with the Berkshire Hathaway ( BRK.B) CEO raising his stake in both tech bellwethers. IBM shares were up 0.02% to $192.25 and Intel shares were down 0.8% to $26.58.

Zynga ( ZNGA), the developer of online games such as Farmville, topped Wall Street's earnings expectations in its first ever quarterly report as a public company. For the three months ended Dec. 31, Zynga reported non-GAAP earnings of $37.2 million, or 5 cents a share, on revenue of $311.2 million. Analysts were expecting profit of 3 cents a share on revenue of $301.1 million. Zynga sees non-GAAP earnings of 24 to 28 cents a share for fiscal 2012, above the current consensus view of 22 cents. Zynga's stock plunged 17.8% to $11.80.

Talks between Yahoo! ( YHOO) and China's Alibaba over Yahoo!'s Asian assets have hit an impasse, Reuters reported Wednesday, throwing plans for a $17 billion tax-free asset swap into question. AllThingsD reported Tuesday that the deal between Yahoo! and Alibaba looks to be dead. Meanwhile, Third Point's Daniel Loeb on Tuesday sought to install his own slate of directors on Yahoo!'s board. Shares fell 1.6% to $15.12.

March oil futures closed up $1.06 to $101.80 a barrel. In other commodities, April gold futures settled up $10.40 to $1,728.10 an ounce.

The dollar index was up 0.3%. The benchmark 10-year Treasury was up 1/32, diluting the yield to 1.936%.

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

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