Trader's Highlight

DJI- NEW YORK, NEW YORK, July 24 (Reuters) - Wall Street stocks fell on Tuesday, hit by signs the euro zone crisis is worsening and evidence that Europe's slowdown is hurting U.S. companies, including bellwether UPS.

The decline was the third straight for the S&P 500 index, which tested its 50-day moving average, a technical support level which could trigger more selling if convincingly broken.

Stocks got a lift late in the session after the Wall Street Journal said Federal Reserve officials were moving closer to taking new steps to spur activity and hiring. Fed officials recently have spelled out what measures they might take, including Chairman Ben Bernanke in a speech last week.

After the market's close, S&P 500 and Nasdaq futures fell on disappointing results from Apple, which reported quarterly revenue below analysts' expectations. Apple's shares fell 4.8 percent to $572.12 in extended-hours trading. 

During the regular session, United Parcel Service, seen by many as a proxy for economic activity, fell 4.6 percent to $74.34 after reporting quarterly results that missed forecasts and cut its 2012 outlook, citing uncertain global economic conditions. UPS helped pull the Dow Jones Transportation average down 1.2 percent.

"We are going through an adjustment period where there has been a lot of talk about Europe facing a recession in 2012. Now we are actually seeing it in the earnings and the market is reacting to that," said Gail Dudack, chief investment strategist at Dudack Research Group in New York.

The struggles of the U.S. and euro zone economies intensified in July, surveys showed on Tuesday. Europe's private sector looked set for a prolonged slump as the surveys showed the downturn that began in the euro zone's small economies has since become entrenched in Germany and France.

Concerns about the euro zone grew after Spain was forced to pay the second highest yield on short-term debt since the launch of the euro and European Union officials said Greece had little hope of meeting the terms of its bailout. 

AT&T Inc lost 2.1 percent to $34.63 after the company reduced its outlook for business services this year. The S&P telecom index dropped 1.8 percent. 

Whirlpool Corp slumped 7.5 percent to $62.25 after the world's largest appliance maker missed Wall Street's expectations for quarterly earnings and sales, hurt by weak demand in Europe and a stronger dollar.

The Dow Jones industrial average was down 104.14 points, or 0.82 percent, at 12,617.32. The Standard & Poor's 500 Index was down 12.21 points, or 0.90 percent, at 1,338.31. The Nasdaq Composite Index was down 27.16 points, or 0.94 percent, at 2,862.99.

The Fed says it is still considering a third bout of quantitative easing, or QE3, and some analysts expect recent weakness in the U.S. economy could prompt policymakers to launch such a program as early as September. 

"Given the events going on around the world, I think the odds are increasing the Fed will take action at one of the next two meetings," said Michael Sheldon, chief market strategist, RDM Financial, Westport, Connecticut.

Of the 145 companies in the S&P 500 that have reported earnings for the quarter, 66.9 percent have beaten analysts' expectations, Thomson Reuters data showed. Over the past four quarters, 68 percent have beaten estimates.

Cisco Systems Inc fell 5.9 percent to $15.12 after VMWare Inc said it would acquire privately held Nicira Inc, a move seen as a threat to Cisco's core switching and routing business.

In another sign of the economic malaise from Europe, Texas Instruments Inc warned that its third-quarter revenue would be weaker as customers show caution due to global uncertainties. The shares lost 0.9 percent to $26.57. 

Spanish five-year government bond yields rose above 10-year yields for the first time since June 2001 as investors fretted about the possibility that Madrid may need a full-blown sovereign bailout. The 10-year note last traded at around 7.6 percent.

Volume was about 6.71 billion shares on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.74 billion shares.

Decliners beat advancers on the NYSE by about 22 to 7. On the Nasdaq, decliners beat advancers about 17 to 7.

NYMEX- NEW YORK, TOKYO, July 24 (Reuters) - U.S. crude futures extended declines into a third day on Tuesday from a 4 percent fall the day before, as concerns that Spain might need a bailout raised anxiety about the euro zone debt crisis and its impact on global oil demand.

CBOT SOYBEAN, Chicago Board of Trade soybean futures fell sharply  on forecasts for crop-friendly rains in portions of the U.S. Midwest crop belt.

* Rainfall in the northern U.S. Midwest over the next 10 days will provide some relief for the drought-stricken corn and soybean crops, an agricultural meteorologist said on Tuesday.

• "It's a wetter forecast than we saw earlier. There's a better chance of rain from Minnesota, into Michigan and into the eastern Ohio River Valley," said Jason Nicholls, meteorologist for AccuWeather.
• A Reuters poll of 11 analysts on Tuesday indicated a U.S. soybean yield at 38.6 bushels per acre and soybean production at 2.9 billion bushels.
• The August contract was above all key moving averages. The nine-day RSI was at 57.

FCPO- SINGAPORE, SINGAPORE, July 24 (Reuters) - Malaysian crude palm oil futures dropped to the lowest level in five weeks on Tuesday, extending losses from the previous day as forecasts for rain in the U.S. Midwest improved the production outlook for soybeans.

An improved production outlook for soybeans could see a higher supply of competing soybean oil, narrowing its premium to palm oil and attracting some demand away from the tropical oil.

A gloomy global economic outlook also weighed on palm oil and other commodity markets, with a surge in Spain's borrowing costs raising concern that the country could seek a costly bailout.

"Prices are reflecting macroeconomic risk aversion, but technically palm prices are terribly oversold," said a trader with a local commodities brokerage in Malaysia. "Prices have again became attractive and exports should soon show signs of recovery. Consumers will soon bargain-hunt as prices are relatively cheap."

The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange lost 2.1 percent to close at 2,926 ringgit ($921) per tonne after trading as low as 2,904 ringgit, the lowest since June 18.

Traded volume stood at 38,763 lots of 25 tonnes each, much higher than the usual 25,000 lots as investors rushed to liquidate their positions.

Weather updates on Monday forecast some rains for soybean crops in the U.S. Midwest this week, helping to offset a weekly crop condition report from the U.S. Department of Agriculture that downgraded soy crop ratings. 

Investor sentiment also weakened as the euro was not far from a two-year low against the dollar, undermined by Moody's change in its ratings outlook to negative for Aaa-rated Germany, the Netherlands and Luxembourg amid Europe's ongoing debt crisis.

Palm oil traders will be looking out for Malaysia's palm oil export data for the July 1-25 period, due to be released on Wednesday, after shipments fell 23 percent over the first 20 days of July from a month earlier.

The market is also watching for signs of El Nino returning to Southeast Asia as the hot and dry weather could hurt palm oil output for top producers Indonesia and Malaysia.

In other markets, crude oil rose above $103 per barrel on Tuesday after China's economy showed signs of improvement, but gains were checked by further evidence of damage to Europe's economy.

Declines in other vegetable oil markets underlined similar investor concerns over wetter weather in the U.S. and the euro zone debt crisis.

By 1004 GMT, the most active U.S. soyoil for December delivery was down 2.3 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 2.7 percent lower.

REGIONAL EQUITY- BANGKOK, July 24 (Reuters) - Stocks in Singapore, Thailand and the Philippines posted small gains in light trading on Tuesday, led higher by banking shares, but the broader sentiment remained weak as gloomy German factory data overshadowed signs of an improvement in China.

Singapore's Straits Times Index finished up 0.53 percent, regaining early lost ground. The Thai SET index and the Philippine index rebounded from an earlier drop to end up 0.21 percent and 0.4 percent, respectively.

Other markets in the region ended lower, with Malaysian shares down 0.2 percent at their lowest close since July 16. Indonesia's slid 0.4 percent to its lowest close since July 13. Vietnam stocks dropped 1.5 percent to a one-week low.