June 13, 2012 / 10:04 AM / 6 years ago

Wall Street sells off late, succumbs to Europe fears

NEW YORK (Reuters) - Wall Street ended lower on Wednesday as fears ahead of the weekend elections in Greece finally drove down a market that had been treading water through most of the day.

A trader works on the floor of the New York Stock Exchange June 12, 2012. REUTERS/Brendan McDermid

Up to 800 million euros ($1 billion) have been pulled out of Greek banks daily ahead of the cliffhanger election on Sunday, which many fear will result in Greece leaving the euro zone. If that happens, investors fear other peripheral nations may also have to exit.

The euro zone’s cloudy future has made investors inclined to quickly reverse positions. On Wednesday, they pounded shares in financial, energy and materials sectors into the close.

Volume surged after three weak sessions. About 7.1 billion share trade on the NYSE, Amex and Nasdaq, slightly above the 20-day moving average.

There’s a “lack of details or specifics coming out of Europe, and that creates more of a vicious cycle,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston. “The euro has been a concern every single day.”

Also weighing on sentiment, the government reported U.S. retail sales fell in May to their worst level in two years, the latest data to point to sluggish U.S. growth after a weaker-than-expected U.S. jobs report in May sparked widespread fears of a slowdown. The S&P Retail Index .RLX lost 1.5 percent.

There was a defensive tilt to trading for much of the day as gains in sectors such as healthcare and telecoms managed for a time to offset declines in cyclical areas. Shares in telecom provider AT&T (T.N) hit a 52-week high at $35.06, before closing unchanged at $34.98. The telecom sector .GSPL ticked up 0.1 percent.

Shares of JPMorgan Chase & Co (JPM.N) were a standout, rising 1.6 percent as the bank’s chief executive, Jamie Dimon, defended the portfolio behind JPMorgan’s recent multibillion-dollar trading loss, telling lawmakers it was a genuine hedge that would make the firm a lot of money if a credit crisis hit.

In the overall market, the Dow Jones industrial average .DJI fell 77.42 points, or 0.62 percent, at 12,496.38. The Standard & Poor’s 500 Index .SPX lost 9.30 points, or 0.70 percent, at 1,314.88. The Nasdaq Composite Index .IXIC dropped 24.46 points, or 0.86 percent, at 2,818.61.

The S&P 500 had moved more than 1 percent in opposite directions on the previous two trading days, which were largely dictated by the events in the euro zone.

On Tuesday the index bounced after falling toward the 1,300 level, a psychological milestone that some traders are using to trade against as index levels assume more importance given the lack of a clear outlook.

Investors have pushed Spain’s 10-year borrowing costs to their highest level since the launch of the euro in 1999, adding to uncertainty over the plan to bail out the country’s struggling banks.

In company news, Dell Inc DELL.O, the No. 2 U.S. PC maker, said it aims to raise its target on dividends and share buybacks to 20 to 35 percent of free cash flow, saying its corporate software and services business is on track to grow by an average of 10 percent annually until 2016. Its shares advanced 2.5 percent to $12.27.

An influential government adviser in China was quoted as saying the country’s economic growth could fall below 7 percent in the second quarter if weak activity persists in June.

Investors have been looking to China’s relatively robust expansion to pick up the slack from Europe, especially demand for commodities.

Also on Wednesday, shares of Celgene Corp (CELG.O) rose 0.8 percent to $63.59 after the biotechnology company authorized a stock buyback program of $2.5 billion.

Editing by Leslie Adler

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