Stocks shrug off Greek worries

Updated: 8:26 p.m. ET

Investors started the weekend assured that Greece and its bondholders would finish negotiations on their debt-restructuring agreement. Soon, the word was. Very soon.

Didn't happen, and a stock slump that began in Asia on Monday spread to Europe. The selling spread to the United States, where stocks sold off sharply right after the open.

Then, the good news came. Stocks recovered nearly all of those early declines. Partly, the averages recovered because strength in technology shares offset weakness in energy and financial shares. Exxon Mobil (XOM), which reports fourth-quarter results Tuesday, was down 34 cents to $85.49 after falling to as low as $84.59. Bank of America (BAC) fell 22 cents to $7.07 after Goldman Sachs cut its rating on the stock from "buy" to "neutral."

The slide also pushed gold (-GC) and crude oil (-CL) modestly lower.

The Dow Jones industrials ($INDU) closed down 7 points to 12,654; the blue chips had been down as many as 131 points early in the session. The Standard & Poor's 500 Index ($INX) slipped 3 points to 1,313, and the Nasdaq Composite Index ($COMPX) was off 5 points to 2,812.

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Two pieces of good economic news helped the market come back.

A Federal Demand for business loans increased in the fourth quarter as economic growth accelerated, according to a Federal Reserve survey of senior loan officers at banks.

Seventeen of 56 banks reported stronger demand among companies with $50 million in annual sales or more, according to the survey released today. Six reported weaker demand. Demand among small businesses for loans increased by the most in any quarter since 2005.

While business demand for borrowing increased, banks reported "little change in standards on commercial and industrial loans but a continued easing of pricing terms," the survey said.

Second, the Federal Reserve Bank of Dallas' monthly Manufacturing Outlook Index showed a big jump from -0.3 to 15.3 in its general business activity index. Most components in the index showed improvement.

The Dow's third straight loss
Today's decline was the third straight for the Dow and fifth decline in the last six sessions. The S&P 500 fell for the third day in a row as well and fourth time in six sessions. The Nasdaq's loss was its second in three sessions and third in the last six sessions.

The losses since the market's highs for the month are slight. From an intraday high of 12,778.30 on Thursday, the Dow has not even fallen 1%. The S&P 500's decline is 1.2%.

With one day left in January, the Dow is up 3.6%, with the S&P 500 up 4.4% and the Nasdaq up 7.9%. The Dow's and S&P 500's gains, if they hold, would be their best for a January since 1997. The Nasdaq's gain would be its best since January 2001.

Twelve of the 30 Dow stocks were higher Monday, led by Verizon Communications (VZ),  Microsoft (MSFT), IBM (IBM) and Merck (MRK). Three Dow stocks were unchanged: Hewlett-Packard (HPQ), McDonald's (MCD) and Cisco Systems (CSCO). (Microsoft publishes MSN Money.)

Thirty-seven stocks in the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, were higher. The index closed up 4 points to 2,465, powered by gains for Apple (AAPL), Microsoft and Qualcomm (QCOM). The trio contributed 9 points to the index's gain.

In addition, 140 S&P 500 stocks were higher.

Energy prices -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Crude oil (-CL)			$98.78			$99.56			-0.05%			-0.05%
(per barrel)
Heating oil (-HO)			$3.0378			$3.0593			4.24%			4.24%
(per gallon)
Natural gas (-NG)			$2.7130			$2.7560			-9.23%			-9.23%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.8727			$2.9234			8.10%			8.10%
(per gallon)
Brent crude			$110.75			$111.46			3.14%			3.14%
(per barrel)
Retail gasoline			$3.4290			$3.4190			4.89%			4.89%
(per gallon; AAA)

A rising dollar weighs on commodities, interest rates
Crude oil was off 73 cents to $98.30 a barrel. Gold settled down $1.80 to $1,731 an ounce. Silver (-SI) dropped 26 cents to $33.53 an ounce, and copper (-HG) was off 6.3 cents to $3.8265 a pound.

The U.S. Dollar Index, which tracks the dollar against a basket of currencies, was higher.
The euro was down against the dollar as investors looked for safety from Europe.

The 10-year Treasury yield was down to 1.816% from Friday's 1.898%.

In addition to the declines in bank and energy shares, metals stocks were lower. Southern Copper (SCCO) fell $1.36 to $34.76. Freeport-McMoRan Copper & Gold (FCX) was off 3 cents to $46.10 after falling to as low as $45.08.

Greece resists a hostile takeover
The sticking point on the Greek negotiations may be this: German Chancellor Angela Merkel wants an external authority to take over the country's taxing and spending authorities.

The Greeks are resisting that demand.

Under a plan leaked on Sunday, European institutions would have direct control over Greece's budget decisions in what would amount to an extraordinary depletion of a member state's independence in conducting its own affairs.

A Greek official dismissed the idea as "absolutely laughable."

At the same time, Portugal finances appeared to be deteriorating. Yields on Portuguese 10-year bonds briefly topped 15% today, according to Tradeweb. The yield on 2-year Portuguese notes topped 21%.

But late Monday, 25 European countries, including 17 eurozone countries did agree to a fiscal pact that imposes tighter budget discipline on members and is aimed to prevent a repeat of the Greek debt disaster. Britain and the Czech Republic are the only two EU countries not to join.

The deal calls for the European Court of Justice to impose fines on countries running excessive deficits, The Wall Street Journal said. The fines will be capped at 0.1% of gross domestic product. For Italy, that could mean fines as high as $2 billion.

The pact will require governments to keep their budget deficits to an average of 0.5% of GDP over the economic cycle—and to reduce their total government debt toward 60% of GDP over time.

Pep Boys will go private
The day's big deal was Pep Boys Manny Moe and Jack (PBY), the automotive service and retail chain, which said it will be acquired by the Gores Group, an investment firm led by billionaire Alec Gores, for about $1 billion.

Pep Boys will be acquired for $15 a share in cash, a 24% premium over Friday's $12.08 closing price. The deal, which has been approved unanimously by the company's board, now goes to a vote by shareholders. Pep Boys closed up $2.85 to $14.93.

While the deal looks great, the company has struggled for some time. The stock peaked at $38.25 in 1996.

Will Delta Air bid for US Airways?
Delta Air Lines (DAL) is considering making a bid for US Airways (LCC), The Wall Street Journal reported over the weekend.

It's just the latest chatter about consolidation in the airline industry since AMR (AAMRQ),  the owner of America Airlines, filed for bankruptcy last year, Barron's noted Monday. Delta, the second-biggest airline in the country, is also reportedly considering a bid for AMR, as is US Airways. Private-equity firm TPG Capital has also reportedly been mulling an AMR deal.

Both Delta and US Airways shares were up about 3% after the merger news.

Any AMR deal could take awhile -- a year at least.

US Airways could be a better fit to join with AMR, at least from an antitrust perspective, analysts say.

Nabors leads the S&P 500; Staples slumps on a rating cut
Nabors Industries (NBR) gained 63 cents to $18.56. Its 3.5% gain was the best among S&P 500 stocks. Traders in the options market were betting the world’s largest land-drilling contractor may be a takeover candidate after 81-year-old Gene Isenberg stepped aside as CEO in October. Anthony Petrello is now the CEO.

Switzerland's ABB reached an agreement to buy electrical parts maker Thomas & Betts (TNB) for $3.9 billion. Thomas & Betts is being bought for $72 a share, a 24% premium to its closing price Friday of $57.95. Thomas & Betts was up $13.36 to $71.31.

Office-supply retailer Staples (SPLS) declined 78 cents to $15.23. The world's largest office products company was cut to "sell" from "neutral" by Goldman Sachs, which cited a tough outlook for the global printing segment.

Gannett (GCI), the big publisher of newspapers, including USA Today, tumbled $1.05 to $14.17. Revenue from the publishing division, the largest unit, declined 5.3% as advertising and circulation fell. The newspaper industry overall has continued to lose ad business to Internet companies such as Google (GOOG) and Facebook.

Wendy's (WEN) fell 20 cents to $5.01. The operator of fast-food restaurants forecast adjusted earnings before interest, taxes, depreciation and amortization in 2012 of $345 million at most. That compares with the average analyst estimate in a Bloomberg survey of $353.1 million.
 
Citigroup (C) Chairman Richard Parsons is considering stepping down after three years in the post, The Wall Street Journal reported. Parsons, 63, is expected to decide by early March, the newspaper said. The bank is expected to keep the posts of chairman and CEO separate. Citigroup was off 64 cents to $30.23.

Short hits from the markets -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0500%			0.040%			400.00%			400.00%
5-year Treasury note			0.732%			0.752%			-11.81%			-11.81%
10-year Treasury note			1.837%			1.898%			-1.82%			-1.82%
30-year Treasury bond			2.983%			3.064%			3.25%			3.25%
Currencies
U.S. Dollar Index			79.302			79.011			-1.52%			-1.52%
British pound			1.5723			1.5716			1.19%			1.19%
(in U.S. $)
U.S. $ in pounds			£0.636			£0.636			-1.18%			-1.18%
Euro in dollars			$1.32			$1.31			1.54%			1.54%
(in U.S. $)
U.S. $ in euros			€ 0.760			€ 0.761			-1.52%			-1.52%
U.S. $ in yen			76.51			76.37			-0.77%			-0.77%
U.S. $ in Chinese			6.35			6.31			0.32%			0.32%
yuan
Canada dollar			$0.999			$1.002			1.85%			1.85%
(in U.S. $)
U.S. dollar			$1.002			$1.002			-1.82%			-1.82%
(in Canadian $)
Commodities
Gold (-GC)			$1,731.00			$1,732.20			10.48%			10.48%
(per troy ounce)
Copper (-HG)			$3.827			$3.889			11.36%			11.36%
(per pound)
Silver (-SI)			$33.5270			$33.7900			20.10%			20.10%
(per troy ounce)
Wheat (-ZW)			$6.4475			$6.4725			-1.23%			-1.23%
(per bushel)
Corn (-ZC)			$6.3175			$6.418			-2.28%			-2.28%
(per bushel)
Cotton			$0.9487			0.9609			3.48%			3.48%
(per pound)
Coffee			$2.1945			2.202			-4.44%			-4.44%
(per pound)
Crude oil (-CL)			$98.78			$99.56			-0.05%			-0.05%
(per barrel)