Stocks Finish Mixed After European Elections
NEW YORK (TheStreet) -- Stocks barely budged Monday as Wall Street reacted with restraint to the shifting political landscape in Europe following weekend elections in France and Greece.
The subdued response implies that investor worries about efforts to instill austerity in the eurozone as well as long-term questions about the overall stability of the single-currency bloc were already priced in to a large extent.
The Dow Jones Industrial Average was down nearly 30 points, or 0.23%, to finish at 13,008.53. The blue-chip index sank as low as 12,970 earlier in the session.
Breadth within the Dow finished mildly negative with 17 of the index's 30 components moving lower. The biggest percentage losers among the blue chips were Caterpillar
Shares of Intel
In the broader market, winners narrowly outpacing losers on the New York Stock Exchange, while gainers were slightly ahead of decliners on the Nasdaq.
On Sunday, Greek voters punished mainstream politicians and voted in favor of a far-right group for Parliament. With the country now in political gridlock and its ability to form a coalition government in doubt, questions have reignited over Greece's ability to carry out the strict reforms and cutbacks required for its crucial international bailout and future with the euro.
Without any relief to the deadlock, Greece may be faced with repeat elections under a caretaker government in mid-June. Around this time, Athens was supposed to be in the process of pushing through a new austerity package worth €14.5 billion ($19 billion) for 2013 to 2014.
During that month, Greece was also scheduled for a € 30 billion ($39.4 billion) installment of aid from other eurozone nations and International Monetary Fund.
Meanwhile, Francois Hollande defeated incumbent Nicolas Sarkozy in the French presidential election by about four percentage points on Sunday.
The election had turned into a referendum on austerity measures championed by Sarkozy and his close partner, German Chancellor Angela Merkel, as they sought to lead the eurozone out of its debt crisis.
Merkel has already invited Hollande to Berlin for his first official visit as France's president after his inauguration on May 15. Merkel cautioned though against any expectations that the austerity measures and the fiscal compact that European leaders have agreed upon will be undergoing renegotiation.
Also on Sunday, Merkel's coalition of Christian Democrats and pro-business Free Democrats lost a state election in the northern state of Schleswig-Holstein, potentially weakening her political clout in Germany and affecting the country's ability to dominate in eurozone decision-making.
"The reaction is somewhat contained because of the lack of acceptance as to what the overall consequences could be," said Jeff Sica, president and chief investment officer of SICA Wealth Management, of the elections. "This market is very short sighted ... it has difficulty looking at consequences that are not right in front of its face."
"The real catalyst will be when Spain is more upfront about the depth of its problems," Sica added.
In Europe, the Dax in Germany was down 0.4% and the London stock exchange was closed for the May Day holiday. The Hang Seng Index in Hong Kong closed down by 2.6%. Japan's Nikkei average fell 2.8%.
The benchmark 10-year Treasury gained 1/32, diluting the yield to 1.881%. The dollar was up 0.1%, according to the dollar index.
In commodity markets, the June crude oil contract was off 58 cents at $97.91 a barrel. June gold futures fell $5.80 at $1,639.40 an ounce.
The only piece of U.S. economic data came late in the afternoon when the Federal Reserve said consumer credit swelled by $21.3 billion in March, more than $10 billion above the consensus estimate compiled by Briefing.com.
Another hot topic on Wall Street on Monday was Facebook kicking off its IPO roadshow in Manhattan. The social networking giant expected to make its public debut on May 18. The pricing range for the shares is $28-$35 each. Sterne Agee is an early bull on the stock, initiating coverage with a buy rating on Monday.
"Just like Google did less than a decade ago, we believe Facebook is disrupting the worldwide advertising market (~$600 billion), particularly its $68 billion sub-segment of online advertising (a market that is expected to reach $120 billion by 2015 or CAGR
In other corporate news, shares of Vertex Pharmaceuticals
On average, analysts expected the company to post a quarterly profit of 38 cents a share on revenue of $8.47 billion. The stock rose 3.3%.
First-quarter reporting season is in the final innings now with 83% of S&P 500 companies having disclosed their results. Of those companies, 68% have beat earnings per share estimates, according to Thomson Reuters, with the consumer discretionary and materials posting the most beats. Twenty-three percent of companies have missed expectations, and 9% have matched expectations.
Stocks are coming off their worst week of 2012 with the big blow coming on Friday following news that the United States added only 115,000 jobs last month.
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--Written by Andrea Tse in New York.
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