Middle-east Arab News Opinion | Asharq Al-awsat

Wall Street flat after euro zone warned on ratings | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page

NEW YORK, (Reuters) – U.S. stocks were little changed in choppy trading on Tuesday, with cautious investors hoping S&P’s downgrade warning for euro zone nations would lead to tighter budget rules at a summit this week.

Rating agency Standard & Poor’s said Monday it may cut the sovereign credit rating of 15 euro zone countries. The warning was leaked during market hours, and U.S. stocks halved their session’s gains.

Bank stocks, recent outperformers in the U.S. market, kept a lid on gains, with the S&P financial sector .GSPF down 0.5 percent. The top-performing sectors were defensive, with healthcare stocks .GSPA up 0.4 percent and consumer staples .GSPS edging 0.2 percent higher.

“Markets have been pricing in an environment that’s less than AAA, and the fact that it has already been incorporated into most investors’ thinking is why we’re not seeing a bigger selloff today,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.

“Still, the timing of a warning like this is never completely expected,” added Grohowski, who helps oversee $170 billion.

The Dow Jones industrial average was up 39.66 points, or 0.33 percent, at 12,137.49. The Standard & Poor’s 500 Index was up 0.17 points, or 0.01 percent, at 1,257.25. The Nasdaq Composite Index was down 6.60 points, or 0.25 percent, at 2,649.16.

France and Germany were planning to force changes to EU rules in hopes of restoring market confidence and preventing the two-year-old sovereign debt crisis from widening. European shares were flat.

General Electric Co was the top performer on the Dow, climbing 2.1 percent to $16.68 after Bernstein upgraded the stock to “outperform,” citing strong financial fundamentals and expected dividend increases.

Fellow Dow component 3M Corp rose 1.8 percent to $82.35 after the diversified manufacturer forecast 2012 earnings and revenue largely in line with expectations as well as modest margin improvement.

On the downside, Darden Restaurants Inc fell 10 percent to $43 after it cut its fiscal 2012 earnings and sales forecast.