(RTTNews) - Stocks staged a notable recovery attempt after falling sharply in early trading on Wednesday but once again ended the day mostly lower. As was the case in the previous session, uncertainty about the political situation in Europe weighed on the markets.
The major averages ended the day firmly in negative territory, although well off their worst levels of the day. The Dow dropped 97.03 points or 0.8 percent to 12,835.06, the Nasdaq fell 11.56 points or 0.4 percent to 2,934.71, and the S&P 500 slid 9.14 points or 0.7 percent to 1,354.58.
The sell-off seen in early trading on Wall Street came as traders continued to express concerns about the results of the recent elections in France and Greece and their potential impact on efforts to address the European debt crisis.
Investors kept a close eye on the political situation in Greece, where leftist leader Alexis Tsipras attempted to form a coalition government. Tsipras is opposed to the terms of the bailout by the European Union and the International Monetary Fund.
Tsipras' efforts have reportedly been unsuccessful, however, with the debt-plagued nation potentially headed to a new round of elections in June.
Further selling pressure was generated by a report from the Wall Street Journal indicating that Eurozone countries were debating a potential delay in a 5.2 billion euro bailout payment to Greece due to the ongoing political uncertainty.
Nonetheless, subsequent reports contradicting the news from the Journal helped the markets to recover, and the European Financial Stability Facility's Board of Directors later confirmed the payment.
The recovery attempt by the broader markets also came as U.S. stocks are seen as somewhat of a safe haven in light of the continued uncertainty in Europe.
In corporate news, shares of Disney (DIS) rose by 1.6 percent after the entertainment giant reported better than expected second quarter results, benefiting from strong performances by its media networks and theme parks.
Sector News
Despite the recovery attempt by the broader markets, significant weakness remained visible in a variety of sectors. Health insurance stocks saw considerable weakness, dragging the Morgan Stanley Healthcare Payor Index down by 2 percent.
Oil stocks also remained stuck firmly in the red, resulting in a 1.7 percent drop by the NYSE Arca Oil Index. The continued weakness in the oil sector came even though crude for June delivery climbed well off its worst levels, ending the day down by just $0.20 a barrel.
Notable weakness also remained visible among banking stocks, as reflected by the 1.6 percent loss posted by the KBW Bank Index. Transportation, pharmaceutical, and healthcare provider stocks also posted significant losses.
Meanwhile, gold stocks showed a substantial turnaround over the course of the trading day after seeing early weakness. The NYSE Arca Gold Bugs Index ended the day up by 1.9 percent after falling by as much as 2.5 percent and setting a two-year low.
Natural gas, housing, and computer hardware stocks also showed strong moves to the upside, helping the markets to recover from the early sell-off.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.5 percent, while Hong Kong's Hang Seng Index ended the day down by 0.8 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.5 percent, percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index fell by 0.2 percent and 0.4 percent, respectively.
In the bond market, treasuries closed nearly unchanged after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day down by less than a basis point at 1.835 percent after hitting a three-month low of 1.793 percent.
Looking Ahead
Following several light days on the U.S. economic calendar, trading on Thursday could be impacted by the release of reports on U.S. trade, import and export prices, and weekly jobless claims.
Traders are also likely to keep an eye on remarks by Federal Reserve Chairman Ben Bernanke, who is due to speak via satellite at the 48th Annual Conference on Bank Structure and Competition.
On the earnings front, Cisco Systems (CSCO), Activision Blizzard (ATVI), News Corp. (NWSA), and Priceline.com (PCLN) are among the companies releasing their quarterly results after the close of trading.
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