Stocks slide further as Obamacare is upheld

By Andrea Tse

Stocks fell Thursday as investor sentiment softened on a gloomy outlook for the eurozone summit and after the U.S. Supreme Court upheld the core of President Barack Obama's health care overhaul.

The ruling preserves most of a law that would expand insurance to millions of Americans, Bloomberg reported. The justices voted 5-4 in saying Congress can make people carry insurance or pay a penalty. The law also requires insurers to cover people with pre-existing health conditions, Bloomberg said. The court limited the law's extension of Medicaid by saying the government may not threaten to withhold money from states that don't fully comply.

The Dow Jones Industrial Average ($INDU) was down 130 points at 12,497. The S&P 500 ($INX) was down 13 points at 1,319. The Nasdaq Composite ($COMPX) was down 39 points at 2,836.

Stocks rose Wednesday, buoyed by better-than-expected​ reports on durable goods orders and pending home sales. The advance came ahead of what's now expected to be an essentially fruitless eurozone summit on Thursday and Friday.

"Expectations for the summit seem to be so low as to create the risk of a positive surprise," perhaps on banking integration, said Paul Donovan, a global economist with UBS. "However, there is also a credibility deficit around euro policy, so any surprise would need to overcome expectations and the credibility shortfall to prevent cynicism re-emerging."

"Europe continues to generate a great deal of heat but very little light," a Birinyi Associates report said. "While the Greek drama has slowed somewhat with their election, the crisis is far from over. Now Spanish banks are the concern d'jour while Italy and the fate of the Euro are right behind."

The stock market research firm noted that while it continues to be optimistic about the stock market, it also advises caution, as there are still too many variables that are beyond investors' capability to absorb and forecast.

Europe is one of them, as are the slowing U.S. economy and those of China, India and Brazil. Also of concern are more financial regulations after the JPMorgan Chase (JPM) and MF Global debacles, recent downgrades of banks by Moody's, and the disillusioning impact of the problem that plagued Facebook's (FB) initial public offering.

The FTSE in London was slipping 0.94%, and the DAX in Germany was sliding 1.64%. The Hong Kong Hang Seng index settled down by 0.79%, and the Nikkei in Japan closed ahead by 1.65%.

In U.S. economic news, the Labor Department reported that initial jobless claims for the week ended Jun. 23 fell by 6,000  to 386,000 from the previous week's upwardly revised figure of 392,000, foreshadowing weakness in the upcoming monthly jobs report. Economists were calling for initial claims of 385,000, according to Briefing.com.

The four-week moving average was 386,750, a decrease of 750 from the previous week's average of 387,500. Continuing claims for the week ended Jun. 16 were at 3.296 million, a decrease of 15,000 from the preceding week's level of 3.311 million.

First-quarter gross domestic product remained at 1.9%, as expected, according to a final read by the Commerce Department.

In corporate news, JPMorgan Chase's (JPM) trading loss related to hedging could total as much as $9 billion, The New York Times reported. CEO Jamie Dimon last month estimated that losses from the bad bet on credit derivatives could double within the next few quarters. But the losses have been mounting in recent weeks as the bank has been unwinding its positions, the Times reported, according to interviews with current and former traders and executives at the bank. The Times said JPMorgan is now out of more than half of the trade and may be completely free this year. JPMorgan will disclose part of the total losses on the hedging bet on July 13, when it reports second-quarter earnings.

The board of News Corp. (NWSA) unanimously approved a plan to split the media giant into two, separating its entertainment operations from its smaller publishing business. The split was formally announced early Thursday morning. One company will include entertainment businesses like 20th Century Fox, Fox broadcast network and Fox News Channel, while the other will encompass publishing assets such as The Wall Street Journal and HarperCollins book publishing.

Research In Motion (RIMM) is expected to post a fiscal-first-quarter​ loss of 1 cent a share for the three months ended in May on revenue of $3.11 billion. The BlackBerry maker will release earnings after the close. RIM last month said it expected to post an operating loss for the first quarter, citing "lower volumes and highly competitive pricing dynamics in the marketplace." The company has hired bankers to help it examine its strategic options.

Family Dollar (FDO) reported third-quarter net income of $124.5 million, or $1.06 a share, up from year-earlier earnings of $111.1 million, or 91 cents a share. On average, analysts were anticipating third-quarter profit of $1.07 a share. Family Dollar said it expects fourth-quarter same-store sales to rise between 5% and 7% and projects fourth-quarter earnings per share of between 71 cents and 81 cents a share. For the fourth quarter, analysts are expecting earnings of 77 cents a share.

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