DJI- NEW YORK, NEW YORK, July 23 (Reuters) - U.S.
stocks fell for a second straight session on Monday, as Spain appeared closer
to needing a national bailout and poor corporate results weighed on the market.
Still, stocks ended well off the
day's lows, rebounding from their initial plunge. Stocks appeared to stabilize
as the S&P 500 approached its 50-day moving average of 1,332.98, a
technical support level that could trigger more losses if convincingly broken.
Overall, three stocks fell for every
one that rose on the New York Stock Exchange on Monday, a signal that the
afternoon rebound was concentrated among larger-cap shares. On the Nasdaq,
about four stocks fell for every one that rose.
"The sell-off this morning was
overdone, and obviously, the market felt that way, too," said Eric Green,
senior portfolio manager and director of research at Penn Capital Management in
Philadelphia, which oversees $6.5 billion.
"Nothing incrementally negative
came out, but obviously, we're still worried about the situation there."
The Spanish region of Murcia looked
set to follow Valencia in tapping a government program to keep its finances
afloat. Local media reported half a dozen regions were ready to follow suit.
Valencia's move contributed to a 1
percent drop in the S&P 500 on Friday. The benchmark index had appeared on
track to exceed those losses on Monday, falling as much as 1.8 percent before
recovering some of those losses.
The International Monetary Fund
dismissed a weekend news report in German weekly Der Spiegel that it may refuse
to continue supporting Greece as it prepares for talks with the new Greek
government on its international bailout.
After the closing bell, Texas
Instruments Inc shares dropped 1.4 percent to $26.44 in extended trading following the company's results. Texas Instruments reported a drop in its
second-quarter profit and sales.
With 23 percent of S&P 500
companies having reported results, 67.5 percent have posted earnings above
expectations, although many analysts have cut their forecasts in recent weeks,
allowing for easier beats. Over the past four quarters, 68 percent of companies
beat estimates.
The high-profile earnings
disappointments have taken a toll on third-quarter estimates. Third-quarter
S&P 500 earnings growth is now expected to come in at 0.9 percent, down
from 3.1 percent at the beginning of the month.
The Dow Jones industrial average fell 101.11 points, or 0.79 percent, to close at 12,721.46. The Standard &
Poor's 500 Index declined 12.14 points, or 0.89 percent, to 1,350.52. The
Nasdaq Composite Index shed 35.15 points, or 1.20 percent, to close at
2,890.15.
At its session low, the Dow was down
as much as 239.16 points, or 1.9 percent, at 12,583.41. The S&P 500 fell as
low as 1,337.56, down 25.1 points, or 1.8 percent, at its session low. The
Nasdaq had touched a session low at 2,852.88, down 72.42 points, or 2.5 percent
from Friday's close.
Energy shares slumped as fears of a
global slowdown prompted investors to sell oil as U.S. crude fell 3.8 percent. Chevron Corp dropped 1.1 percent to $107.95. The NYSE Arca oil index lost 1.7 percent.
The CBOE Volatility Index jumped 14.4 percent to 18.62 at the close. According to the VIX Open Interest
Put-to-Call ratio, VIX options traders are holding only 50 puts for every 100
calls outstanding on the VIX. The last time this ratio hit this level was early
August of 2011, just before a huge volatility spike that lasted nearly four
months, he said.
The euro slid to a two-year low
against the dollar and a near 12-year trough against the yen, pressured by
fears that Spain may eventually need a full sovereign bailout.
The yield on the Spanish 10-year
bond was last at 7.496 percent, well over what analysts
consider a sustainable level.
Volume was light, with about 6.13
billion shares traded on the New York Stock Exchange, the American Stock
Exchange and Nasdaq, below last year's daily average of 7.84 billion.
NYMEX- NEW YORK, NEW YORK, July 23 (Reuters) - The
euro fell to a two-year low against the U.S. dollar and a nearly 12-year trough
against the yen on Monday on fears Spain was closer to needing a full-scale
bailout that the euro zone cannot afford.
Ten-year Spanish bond yields jumped as high as 7.596 percent, the highest since
the euro was created in 1999. That saw the euro drop for a fourth straight day
against the dollar to hit a low of $1.2067, the weakest since June 2010.
Traders and analysts say the euro
looks poised to take out the key $1.20 threshold. A break beneath that could
see the currency head towards its June 2010 low of $1.1875, which marked the
weakest since March 2006.
"With the 10-year yield above 7
percent and quickly approaching 8 percent, we're at that moment where it starts
to look a lot more real than it was even just a few weeks ago," said John
Doyle, foreign-exchange strategist at Tempus Consulting in Washington,
referring to a full-scale sovereign bailout for Spain.
The euro extended declines against
the dollar in late Monday trading after Moody's Investors Service changed its
ratings outlook to negative for Aaa-rated Germany, the Netherlands and
Luxembourg, citing uncertainty about the euro zone's ongoing debt crisis.
The ratings agency said it saw an
increased chance that troubled euro zone countries such as Spain and Italy
would need more support, the burden of which would fall on the highest-rated
states.
Adding to pressure on the euro was a
weekend report that the International Monetary Fund may refuse to contribute
further funding for Greece. The IMF dismissed the report, saying it was
“supporting Greece in overcoming its economic difficulties.”
The European Central bank, the
European Commission and the International Monetary Fund -- known as the troika
-- will arrive in Athens on Tuesday to push for further cuts needed for the
country to qualify for further rescue payments.
The euro last traded at $1.2135, down 0.2 percent. After closing at $1.2156 in New York
on Friday, it "gapped" lower to open at $1.2120 in Asia on Monday
morning, signifying the market perceived the value of the euro had dropped over
the weekend in response to events in the euro zone.
Some $6.46 billion of euros have
changed hands on Reuters Dealing through the Monday session.
Against the yen,
the euro hit 94.22 yen, a level not seen since late 2000, and last was off 0.3
percent to 95.11.
Weakness in the euro was seen across
the board as it also hit a record low versus the Australian dollar,
a more than 3-1/2-year low against sterling and a 9-1/2-year low versus the Norwegian crown.
Spain's Economy Minister Luis de
Guindos ruled out a full-scale financial rescue on top of the 100 billion euros
already earmarked for the country's banks.
Ashraf Laidi, chief global
strategist at City Index Ltd. in London, said some economists estimate a second
bailout for Spain could amount to as much as 300 billion to 400 billion euros.
FUNDING STRAINS
Tiny Murcia was on course to be the
second Spanish region to request help from the central government, and media
reported half a dozen local authorities were ready to follow in the footsteps
of heavily indebted Valencia, which rattled markets on Friday.
Catalonia, Spain's biggest region by
gross domestic product, also has the highest debt. It said this week it had not
decided whether to tap the funding mechanism, though it is seen as an
increasingly likely candidate.
Axel Merk, portfolio manager of the
$500 million Merk Hard Currency Fund in Palo Alto, California, said the market
is pricing in the reality that "the Spanish government is now clearly on
the hook for the regions’ debt.
"Spain’s central government is
expected to bail out its regions – and in return may ask for a bailout
itself," he wrote to clients. "As long as debt is merely shuffled
around, the euro zone crisis won’t be solved."
Italy may be under similar pressure,
with a newspaper quoting unnamed government specialists as saying that 10
Italian cities including Naples and Palermo face problems managing their
finances.
The dollar fell to a seven-week low
of 77.95 yen, before rebounding to 78.43, little changed on the day.
Japan's vice finance minister for
international affairs was reported as saying the country will not exclude any
options when responding to excessive currency moves, although traders said the
authorities were unlikely to consider intervening while the dollar held above
76 yen.
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 and on falling
equities
markets.
* Midday weather updates still
indicate some rain for corn and soybean crops in the northern U.S. Midwest this
week and there is a better chance for crop-friendly weather in the extended
outlooks, an agricultural meteorologist said on Monday.
- "There will be some rains in the north early this
week and the southwest should see some light rain late in the week, which
would be the first significant rain since June," said Andy Karst,
meteorologist for World Weather Inc.
- Meteorologists said the showers won't be "drought
busters" but "it will h elp some crops that aren't already
dead," Karst said. Karst also said the midday weather updates
indicate a better chance for showers and cooler weather in the Midwest in
early August.
- "It looks cooler and wetter in the Midwest Aug.
4-7 and we've added some rain for the eastern Corn Belt for July 30 to
Aug. 1st," he said.
- A Reuters poll indicated another decline in soybean
condition ratings in the USDA's weekly crop progress report to be released
late on Monday.
- Another Reuters poll showed an expected decline of 15
percent from record high prices for soybeans by the end of the year but
still at an end-of-year record high of $15.40, up 28.5 percent from the
close of 2011.
- Goldman Sachs on Monday pegged U.S. soybean yield per
acre at 39.5 bushels and raised its three-month forecast for soybean
prices to a record $20 per bushel.
- August was above all key moving averages. The nine-day
RSI was at 68.
FCPO- SINGAPORE, SINGAPORE, July 23 (Reuters) -
Malaysian crude palm oil futures dropped to the lowest in more than a month on
Monday, tracking broader financial market weakness on fresh concern over
Spain's ability to avoid a costly bailout that could worsen the euro zone debt
crisis.
Risky financial assets including
crude oil and grains futures suffered declines as investors liquidated their
positions on concern that the debt crisis could stall global growth and damp
fuel and food demand.
Half a dozen local governments were
ready to follow in the footsteps of Valencia, which on Friday said it would
need help from Madrid, Spanish local media reported.
Relentless heat in the U.S. grain
belt continued to destroy soybean crops and tighten soybean oil supply, but
analysts said investors took cues from macroeconomic factors instead.
"It's been two weeks that we've
been talking about the U.S. weather, so the weather risk has already been
factored in unless we hear something new coming from El Nino," said Ker
Chung Yang, commodities analyst with Phillip Futures in Singapore.
"There's news about Valencia
seeking a bailout that has pushed Spanish bond yields to new high and that
could weigh on the market."
The benchmark October palm oil
futures on the Bursa Malaysia Derivatives Exchange lost 1.7
percent to close at 2,990 ringgit ($943) per tonne. Prices earlier touched a
low at 2,969 ringgit, the lowest since June 22.
Traded volume stood at 27,369 lots
of 25 tonnes each, higher than the usual 25,000 lots.
Traders said the weak sentiment was
due in part to slow exports and higher production in No.2 producer Malaysia,
which could boost palm oil stocks after they fell to a 14-month low in June.
Malaysia's palm oil exports fell 23
percent over the July 1-20 period from a month earlier, said cargo surveyors
Intertek Testing Services and Societe Generale de Surveillance.
Exports to China slowed by more than
half for the period on high stockpiles and a slowdown in demand after China's
economy showed signs of slowing, said a Singapore-based trader.
But 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 prices
slipped towards $103 per barrel on Monday as investors sold off riskier assets
and fled for the perceived safety of the dollar on fears that Spain will be
unable to avoid a costly sovereign bailout.
Concern over the euro zone debt
crisis also weighed on other vegetable oil markets.
By 1005 GMT, the most active U.S.
soyoil for December delivery was down 1.7 percent and the most active January
2013 soyoil contract on the Dalian Commodity Exchange had lost 2.2 percent.
REGIONAL EQUITY- BANGKOK, July 23 (Reuters) -
Southeast Asian stock indexes closed lower after light volume trading on Monday
as investors sold risk assets amid concerns Spain might require a full
sovereign bailout, while Thai shares fell nearly two percent on PTTEP's capital
raising plan.
The Thai benchmark SET index finished down 1.9 percent, its biggest percentage drop in one day since June 1.
Energy explorer PTT Exploration and Production Pcl dropped 4.8 percent to its lowest close in six weeks.
Other markets also came under
selling pressure with Jakarta stocks ending down 1.8 percent at a one-week low and Philippine stocks dropping 1.4 percent to their lowest close in almost a month.
Singapore's Straits Times Index was down 1.1 percent at a one-week low. Malaysian shares and Vietnam's stock index fell 0.4 percent and 0.6 percent,
respectively.