Dow off 179 on Greek worries, economic weakness

Updated: 11:24 p.m. ET

The question with Tuesday's rally was whether it was a one-day wonder or the start of something big. The short answer: It was a one-shot rally.

Stocks slumped today, with the major averages giving back all of Tuesday's gains -- and then some. Traders were worried about global growth, domestic inflation and indications that the Greek debt crisis was spinning out of control. Moody's put the top three banks in France on review for a possible downgrade.

There was some cheerful news -- at least at the open -- about Pandora Media (P), the Internet radio company. Its shares opened at $20, up 25% from the $16 price the shares fetched when the company went public late Tuesday, and quickly reached $26.

But the shares fell back and closed up 8.9%, to $17.42. There wasn't quite the euphoria about this stock that there was about LinkedIn (LNKD), whose shares more than doubled on its first day of trading. 

Pandora's lot may be a function of a weak stock market and investor wariness about buying a stock in a company that's never earned a full-year profit.

The Dow Jones industrials ($INDU) closed down 179 points, or 1.5%, to 11,897. The blue chips fell to as low as 11,862 today and have been below 12,000 for three of the last four sessions. The Standard & Poor's 500 Index ($INX) was down 22 points, or 1.7%, to 1,265, breaking below a strong support level at 1,272. The Nasdaq Composite Index ($COMPX) was off 47 points, or 1.8%, to 2,631.

Article continues below.The drubbing trimmed the Dow's gain for the year to 2.8%; the blue chips had been up 10.7% after peaking on April 29. The S&P 500 is up just 0.6%, while the Nasdaq is off 0.8% for the year. Since that April 29 peak, the Dow and S&P 500 have fallen a bit more than 7.1% since peaking on April 29; the Nasdaq is off 8.5%.

The Dow Jones Transportation Average ($DJT) is off 7.4% since the end of April. The Philadelphia Semiconductor Index ($SOX) is down 11.4%, and the NYSE Arca Networking Index ($NWX.X) is down 17.1%.

The worries about Europe sent the dollar surging against major currencies. The euro fell to $1.41844 and has fallen more than 5% since peaking on May 4 at $1.4939. The 10-year Treasury yield fell to 2.995% from Tuesday's 3.099%.

The dollar rally has pushed oil and other commodities lower. Crude oil (-CL) was down $4.56 to $94.81 a barrel. Crude has fallen 16.8% since the end of April. Brent crude was off $3.06 to $117.10 a barrel.

Gold (-GC) had reached as high as $1,535.70 an ounce but fell back as the Greek situation intensified. It settled at $1,526.20, up $1.80 on the day and was trading above $1,531 an ounce at 5:05 p.m. ET. Silver (-SI) settled down slightly at $35.41 an ounce but also was trading higher electronically. Copper (-HG) settled down 3.3 cents to $4.122 a pound and was flat after hours.

Corn and wheat futures were sharply lower on expectations of big crops globally this year.

Coming Thursday: RIMM earnings, jobless claims
Futures trading suggests that stocks will open slightly lower on Thursday. To be sure, the markets will face some challenges. In addition to Greece, the biggest challenge will be the market's reaction to the weekly report on jobless claims, due before stocks open.

That will be followed at 10 a.m. by the monthly Philadelphia Federal Reserve Bank's monthly report on manufacturing in the Middle Atlantic region.

And the Commerce Department will report on housing starts for May.

The most important earnings report will come after the close from Research In Motion (RIMM), the maker of the BlackBerry smart phone. The company is expected to earn $1.32 a share in its fiscal-first quarter, down from $1.38 a share a year ago. Revenue is expected to jump 21.3% to $5.14 billion.

Shares are down 18% this month and 39% for the year because of the company's struggles to mount an effective counter-attack to Apple's (AAPL) iPhone.

Greece's woes batter the euro

The euro dropped the most in more than a month against the dollar after Greece's government lost political support as the European Union struggled to break a deadlock on a second financial rescue for the nation. 

In a televised address late today, Greek Prime Minister George Papandreou said that he would reshuffle his cabinet and demand a vote of confidence in parliament.

The announcement came as police clashed with protesters in Athens who were marching against austerity measures required to receive the next disbursement of a bailout package aimed at helping Greece avoid a debt default. Finance Minister George Papaconstantinou, the architect of the unpopular measures, is likely to lose his position in the reshuffle. 

Papandreou had earlier offered to step aside to facilitate forming a national unity government with the country’s biggest opposition party.

Police fired tear gas at 20,000 people who encircled the Parliament House today in protest of Papandreou’s additional wage cuts and tax increases. The nation’s two biggest unions were on strike. 

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil (-CL)			$94.81			$99.37			-7.68%			3.75%
(per barrel)
Heating oil (-HO)			$2.98			$3.13			-2.23%			17.34%
(per gallon)
Natural gas (-NG)			$4.58			$4.58			-1.91%			3.90%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.92			$3.06			-7.20%			19.17%
(per gallon)
Brent crude			$117.10			$120.16			0.32%			23.59%
(per barrel)
Retail gasoline			$3.69			$3.70			-2.41%			20.08%
(per gallon; AAA)

Energy, metal, bank stocks are the day's laggards
Energy, materials and financial stocks were by far the market's weak sectors.
The Financial Select Sector SPDR (XLF) exchange-traded fund was down 2.2% to $14.73. Bank of America (BAC) was the second-worst performer among the 30 Dow stocks, down 2.8% to $10.50 after hitting a 52-week low of $10.41. Wells Fargo (WFC) was off 1.7% to $26.55.

All 10 S&P 500 sectors and all 30 Dow stocks were lower. McDonald's (MCD) and Walt Disney (DIS) were the best performers, down 0.3% to $81.24 and 0.5% to $38.39, respectively.

Only 19 S&P 500 stocks and three Nasdaq-100 ($NDX.X) stocks were higher on the day. The Nasdaq-100, which represents the largest Nasdaq stocks, was off 39 points, or 1.8%, to 2,211.

NetApp (NTAP), up 1.4% to $50.55, was the Nasdaq-100 leader, followed by Warner Chilcott (WCRX), up 0.1% to $23.07, and Green Mountain Coffee Roasters (GMCR), barely higher at $79.85.Boston Scientific (BSX), up 2.8% to $6.93, was the S&P 500 leader.

Alcoa (AA), Home Depot (HD) and  Caterpillar (CAT) were the Dow laggards, falling at least 2.3% on the day because of the disappointing data on manufacturing, industrial production and homebuilder confidence. Ford Motor (F) fell 2.1% to $13.15 after saying pretax profit will be lower in the second half than in the first half.

A bad day for economic data
Industrial production grew by 0.1% in May after showing no change in April, the Federal Reserve said today. May’s level fell short of expectations for growth of 0.2%. Capacity utilization remained unchanged at 76.7% in May, which was downwardly revised from April’s initial level of 76.9%. Economists had expected utilization to tick up to 77% in May.

Stocks also fell as a report showed that manufacturing in the New York region unexpectedly shrank in June, a sign the industry still faces parts shortages following the March 11 earthquake and tsunami in Japan.
 
Consumer prices rose 0.2% in May, the Bureau of Labor Statistics said. That was slightly ahead of the 0.1% uptick that economists had expected. The core rate, which excludes volatile food and energy prices and is considered the closest gauge of inflation, gained 0.3%, outpacing expectations for an increase of 0.1%. In April, consumer prices rose 0.4% and the core rate grew by 0.2%.

The National Association of Home Builders said its housing market index fell to a reading of 13 in June, from May’s level of 16. The market had been anticipating no change from May’s reading.

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.05%			0.06%			0.00%			-58.33%
5-year Treasury note			1.55%			1.69%			-8.29%			-23.21%
10-year Treasury note			2.97%			3.10%			-2.52%			-10.05%
30-year Treasury bond			4.20%			4.30%			-0.40%			-3.74%
Currencies
U.S. Dollar Index			76.072			74.692			1.84%			-4.06%
British pound			$1.62			£1.64			-1.78%			3.66%
(in U.S. $)
U.S. $ in pounds			£0.62			£0.61			1.81%			-3.53%
Euro in dollars			$1.42			$1.44			-1.81%			5.92%
(in U.S. $)
U.S. $ in euros			€ 0.71			€ 0.69			1.85%			-5.59%
U.S. $ in yen			81.10			80.51			-0.65%			-0.32%
U.S. $ in Chinese			6.50			6.48			0.05%			-1.67%
yuan
Canada dollar			$1.021			$1.033			-1.25%			1.78%
(in U.S. $)
U.S. dollar			$0.980			$0.980			1.25%			-1.74%
(in Canadian $)
Commodities
Gold (-GC)			$1,526.20			$1,524.40			-0.69%			7.37%
(per troy ounce)
Copper (-HG)			$4.1215			$4.155			-1.34%			-7.32%
(per pound)
Silver (-SI)			$35.406			$35.411			-7.56%			14.46%
(per troy ounce)
Wheat (-ZW)			$7.085			7.3125			-9.43%			-10.80%
(per bushel)
Corn (-ZC)			$7.2575			7.555			-2.91%			16.59%
(per bushel)
Cotton			$1.5196			1.5554			-4.23%			4.94%
(per pound)
Coffee			$2.6265			2.6925			-0.74%			9.21%
(per pound)
Crude oil (-CL)			$94.81			$99.37			-7.68%			3.75%
(per barrel)