Stocks struggle as eurozone worries persist

By Andrea Tse

Stocks were stalled Monday as a victory by Greece's pro-bailout party failed to quell longer-term uncertainties about the eurozone.

The Dow Jones Industrial Average ($INDU) was down by 31 points at 12,737. S&P 500 ($INX) was down by 2 points at 1,341. The Nasdaq Composite  ($COMPX) was up 9 points at 2,882.

Official projections show that Greece's pro-bailout New Democracy party was set to win 29.7% of votes and 129 seats in the 300-member Parliament, trumping the 26.9% of votes and 71 seats obtained by the leftist Syriza party. The New Democracy Party now faces the challenge of forming a viable coalition government.

"A temporary relief rally in the euro and risk assets does not mean that uncertainty has been eliminated," HSBC analysts said. "Antonis Samaras, the pro-bailout New Democracy leader, has said that he, too, wants to renegotiate some of the terms of the bailout, which means that a temporary halt to Troika funding cannot be ruled out. More immediately, New Democracy needs to form a coalition involving center-left Pasok, which has suggested forming a national unity government including anti-bailout party Syriza."

There are rumors that Pasok, the party that came in third, won't form a coalition with the New Democracy Party unless Syriza is involved, implying that there could be no government in Greece for a while.

"The uncertainty now begins," Paul Donovan, a global economist with UBS, said in reference to the composition of the new government and how the renegotiation of Greece's bailout terms will progress.

Meanwhile, other ongoing worries about the eurozone returned to the forefront, with

the Spanish 10-year bond yield rising above 7%, saddled by reports that bad bank loans in the country have reached an 18-year high.

The FTSE in London was ahead by 0.35%, and the DAX in Germany was rising 0.62%. Hong Kong's Hang Seng index closed higher by 1.01%, and Japan's Nikkei Average settled up 1.77%.

In the U.S., homebuilder sentiment for June came in at 29, its highest level in five years, the National Association of Home Builders reported. But any reading below 50 indicates builders generally view market conditions as weak, and the index has not topped 50 since April 2006.

In corporate news, Microsoft (MSFT) has a media event scheduled for Monday at which the software giant could unveil a tablet computer developed in conjunction with Barnes & Noble (BKS). According to TechCrunch, Microsoft has a tablet/e-reader on tap and it will be entertainment-driven​. Microsoft and Barnes & Noble announced a strategic partnership in late April, with Microsoft investing $300 million in the venture. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

PetSmart (PETM) announced it is raising its quarterly dividend to 16.5 cents a share from 14 cents, an increase of 18%. The company also said it will repurchase $525 million in stock. The program will begin on July 30.

Chevron (CVX)sold an equity stake in its Wheatstone project in Australia and agreed to supply additional liquefied natural gas to Tokyo Electric Power. Chevron's $29 billion Wheatstone gas-export project is expected to begin exporting gas in 2016.

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