S&P 500 flirts with two-month low before rebound

Wed May 9, 2012 5:45pm EDT
 
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By Angela Moon

NEW YORK (Reuters) - Stocks fell for the fifth day in six on Wednesday as investors kept their focus on the turmoil in Europe, but news that Greece will receive its latest debt bailout payment helped cut losses late in the session.

In the afternoon the Nasdaq briefly turned positive and the S&P rose to break-even after news that Greece will get 5.2 billion euros in emergency aid.

The turmoil in Europe has driven Wall Street's slide and more investors were hedging against potential further losses. The Dow fell for a sixth straight day and the S&P touched a two-month low before cutting losses.

"It's a very difficult market to trade in. I'm advising my clients to just hedge out all the way into July because we are going to see some heightened volatility like today for awhile," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab in Austin, Texas.

The CBOE Volatility index, Wall Street's "fear gauge," rose 5.8 percent to 20.15, the highest close in two months.

The yield on the 10-year Spanish bond climbed above 6 percent, seen as a troublesome level among investors, after Spain said it will demand banks set aside another 35 billion euros ($45 billion) against loans to the ailing building sector. Huge bank losses have raised fears that the country may need an international bailout.

Despite the late-day rebound, eight of 10 S&P sectors ended the day lower, and nearly two stocks fell for every one that rose on the New York Stock Exchange.

The Dow Jones industrial average .DJI finished down 97.03 points, or 0.75 percent, at 12,835.06. The Standard & Poor's 500 Index .SPX was down 9.14 points, or 0.67 percent, at 1,354.58. The Nasdaq Composite Index .IXIC fell 11.56 points, or 0.39 percent, at 2,934.71.   Continued...

 
Traders work on the floor of the New York Stock Exchange, May 9, 2012. REUTERS/Brendan McDermid