Wall Street rebounds from lows as Greek worry ebbs

May 9th, 20124:57 pm @

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NEW YORK |
Wed May 9, 2012 12:42pm EDT

NEW YORK (Reuters) – Stocks rebounded from session lows on Wednesday as optimism grew that Greece was likely to get a bailout payment approved.

Stocks had tumbled more than 1 percent earlier in the session, with the SP 500 hitting a two-month low over concerns about political uncertainty in Greece and Spain’s weak banks.

The yield on the 10-year Spanish bond climbed over 6 percent, seen as a troublesome level among investors, after Spain came up with a plan to 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.

But worries about the region eased as sources said the board of the euro zone’s EFSF fund was more likely than not to approve the payment of 5.2 billion euros ($6.8 billion) to Greece. The approval was deemed likely despite Greece’s recent election in which the country’s pro-bailout parties were denied a majority by other political parties that had rejected the bailout’s strict austerity terms.

“What happens is that every time there are these problems in Europe, it gets very, very dark and then someone pulls a solution out of the hat,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

“That is creating some complacency here. People think, ‘Oh, this Greek thing is going to get worked out.'”

U.S.-listed shares of Banco Santander SA (STD.N) dropped 5.3 percent to $6.03 while the FTSEurofirst 300 index .FTEU3 ended at its lowest level in four months. .EU

The recent turmoil in Europe has moved to the forefront of investor focus and has helped drive Wall Street’s slide, with the benchmark SP 500 index down five of the last six sessions as earnings season winds down and few domestic economic indicators are released.

The Dow Jones industrial average .DJI dropped 106.19 points, or 0.82 percent, to 12,825.90. The Standard Poor’s 500 Index .SPX lost 10.45 points, or 0.77 percent, to 1,353.27. The Nasdaq Composite Index .IXIC slipped 18.75 points, or 0.64 percent, to 2,927.51.

Walt Disney Co (DIS.N) reported quarterly earnings that beat expectations late Tuesday on strong theme park attendance and higher cable network advertising revenue. Shares of Disney, a Dow component, rose 2.2 percent to $45.26, after earlier hitting a lifetime high at $45.80. The success of its superhero movie, “The Avengers,” also helped bolster Disney’s stock.

Macy’s Inc (M.N) earnings rose more than expected, but the stock fell 3.5 percent to $38.12 on disappointment that the department-store chain didn’t change its outlook.

With 441 of the SP 500 companies reporting results through Wednesday morning, 66.7 percent exceeded estimates, according to Thomson Reuters data. At the start of earnings season, more than 80 percent had beaten estimates.

Yahoo Inc (YHOO.O) slipped 0.4 percent to $15.30. Company director Patti Hart, who led the hiring process of Chief Executive Scott Thompson, will leave the board as the Internet company investigates Thompson’s educational credentials, sources said.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/AdxWJh0OW3Y/us-markets-stocks-idUSBRE83T09920120509