By Saumya Vaishampayan
U.S. stocks extended their price declines on Wednesday, as
recent optimism about a bailout deal for Greece faded.
The Dow Jones Industrial Average declined 160 points, or 0.9%,
to 17984, trading near its low for the day. The S&P 500 index
lost 14 points, or 0.7%, to 2110, and the Nasdaq Composite Index
fell 37 points, or 0.7%, to 5123.
Declines were broad-based. All 10 S&P sectors were in
negative territory, led by a 1.3% fall in materials stocks. Goldman
Sachs Group Inc.'s shares fell 2.1%, contributing about 30 points
to the Dow's overall decline.
European stocks slipped amid concerns about Greece. Germany's
DAX lost 0.6% and France's CAC-40 fell 0.2%.
Remarks from European finance ministers suggested a Greek
bailout deal isn't likely to be reached on Wednesday. Earlier,
Greek Prime Minister Alexis Tsipras attacked the country's
international creditors after they rejected a list of economic
measures Greece said it was willing to undertake in exchange for
financial aid.
"Recently, it's been Greece driving the market," said Larry
Weiss, head of trading at brokerage firm Instinet. "We move around
with the hope of a settlement or fear of an exit," he added.
Without an agreement before the end of the month, Greece is set
to default on a June 30 payment to the International Monetary Fund,
which would fuel concerns about the country's potential exit from
the eurozone.
In recent days, the market has been driven by investors making
passive bets on stocks, such as buying or selling through
stock-index futures or exchange-traded funds, rather than buying
individual shares, traders said. That tends to happen when
investors are focusing on broad economic or political news, such as
Greece's bailout negotiations.
"I'm more concerned about how this [Greek deal] gets
structured," said Bob Landry, who manages about $165 million as an
equity portfolio manager at USAA investments. "Anything that
doesn't introduce a pro-growth type solution is destined to fail
down the road," he said.
Wednesday's losses dragged the Dow industrials into negative
territory for the month, down 0.1%. The S&P has added 0.2% and
the Nasdaq Composite has advanced 1.1% in June so far.
Economic data also attracted attention. The U.S. slowdown in the
first quarter was less severe than previously estimated, according
to data released Wednesday. Gross domestic product contracted at a
0.2% annual rate in the first quarter, the Commerce Department
said, versus a previously estimated 0.7% contraction. Economists
surveyed by The Wall Street Journal had expected a 0.2%
contraction.
Many stock investors say the pace of U.S. economic growth is
critical for a pickup in corporate revenue and earnings. Corporate
profits were soft in the first quarter, hamstrung by a strong
dollar and lower oil prices.
"To have a surprisingly good earnings quarter is going to
require revenue growth," said David Bahnsen, a managing director at
HighTower in Newport Beach, Calif. "To have good revenue growth,
you're probably going to need a stronger economic tailwind, meaning
good GDP growth," he said.
In commodity markets, gold futures fell 0.2% to $1173.90 an
ounce. Crude-oil futures lost 1.3% to $60.22 a barrel.
The yield on the 10-year Treasury note slipped to 2.370% from
2.409% on Tuesday. Yields fall as prices rise.
In corporate news, home builder Lennar Corp. said profit rose
33% in its latest quarter, beating expectations. Shares gained
4.4%.
Monsanto Co. reported earnings for its third quarter that topped
analysts' expectations. The seed company said it expected
fourth-quarter results to break even, while analysts most recently
expected earnings of 31 cents. Shares fell 5.3%.
Netflix Inc. said it plans to split its stock 7-for-1, a move
intended to make its shares more attractive to retail investors.
Shares slipped 0.2%.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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