Dow off 138 as European worries slam stocks

Updated: 2:20 a.m. ET, Tuesday

Europe's debt crisis beat up the U.S. stock market today as worries built that a summit set for this week will accomplish little to stabilize the region's financial and banking system.

The Dow Jones industrials ($INDU) were down as many as 183 points before losses were trimmed by a quarter. The Standard & Poor's 500 Index ($INX) briefly went into the red for June. A surprising gain in new-home sales was largely ignored.

Financial and energy stocks were the weakest sectors of the market. Health care stocks were lower as investors awaited the Supreme Court's ruling on the 2010 federal health care law. That decision is now expected Thursday at the earliest.

The euro dropped against the U.S. dollar. That, in turn, pressured many commodity prices. Crude oil (-CL) briefly fell below $79 a barrel in New York before rebounding. Brent crude briefly dropped under $90 a barrel. Gold (-GC), however, was higher.

The Dow closed off 138 points to 12,503. The S&P 500 dropped 21 points to 1,314. The index had fallen to as low as 1,309 around 12:30 p.m. ET, a point below its May 31 close. The Nasdaq Composite Index ($COMPX) dropped 56 points to 2,836. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was down 52 points to 2,534.

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Apple (AAPL), the largest influence on the index, was off $11.33 to $570.77. Microsoft (MSFT) was off 84 cents to $29.87 after announcing it had acquired social networking site Yammer for $1.2 billion. Reports of the deal surfaced about two weeks ago.

Apple and Microsoft contributed more than 15 points to the Nasdaq-100's decline. (Microsoft is the publisher of MSN Money.)

The finish left the Dow up 0.88% for June, with the S&P 500 up 0.26% and the Nasdaq up 0.31%. For the year, the Dow is up 2.3%. The S&P 500 is up 4.5%, with the Nasdaq up 8.9%.

Walgreen (WAG) is the key earnings report on Tuesday. Standard & Poor's releases its April S&P / Case Shiller Home Price Index report, and the Conference Board reports on consumer confidence in June.

After the close, Moody's Investors Service downgraded its ratings on 28 Spanish banks. The downgrades reflect the weakness in the Spanish economy and worries about the Spanish government's creditworthiness. As important, the downgrades reflect Moody's concern over the banks' exposure to losses in commercial real estate.

Futures trading suggests stocks will open slightly lower on Tuesday.

Is News Corp. headed to a break up?
The market will take some time to examine a story in The Wall Street Journal that says Rupert Murdoch's News Corp. (NWSA) is considering breaking the company into two pieces.

One would contain News Corp's film and television businesses, including the Fox Broadcasting Network and the Fox News Channel, The Journal said.

The other, smaller piece, would contain the company's newspaper and publishing businesses, including Dow Jones & Co., the parent of The Journal, plus newspapers in England and Australia. News Corp. shares closed Monday at $20.85, down 28 cents.

The shares are up 12.6% on the year -- but down 15.4% from their high in 2007 before News Corp. bid $5.7 billion for Dow Jones.

Crude oil holds below $80
Crude oil settled down 55 cents to $79.21 a barrel after falling to as low as $78.03. Brent crude settled up 3 cents to $91.01 a barrel after falling to as low as $89.60.

The national average price of gasoline fell to $3.411 a gallon from $3.42 on Sunday and $3.454 on Friday, according to AAA's Daily Fuel Gauge Report. Monday's price is down 13.3% from highs reached in early April, although the price is still up 4.1% for the year.

Gold settled up $21.50 to $1,588.40 an ounce, although it has been moving lower in electronic trading.

Copper (-HG) was up 1 cent to $3.316 a pound. Silver (-SI) finished up 85.9 cents to $27.52 an ounce.

Interest rates were lower, with the 10-year Treasury yield falling to 1.614% from 1.672% on Friday.

Energy prices -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Crude oil (-CL)			$79.21			$79.76			-8.46%			-19.85%
(per barrel)
Heating oil (-HO)			$2.5348			$2.5320			-6.23%			-13.02%
(per gallon)
Natural gas (-NG)			$2.7340			$2.6680			12.88%			-8.53%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.4982			$2.4676			-8.25%			-5.99%
(per gallon)
Brent crude			$91.01			$90.98			-10.66%			-15.24%
(per barrel)
Retail gasoline			$3.4110			$3.4200			-5.77%			4.12%
(per gallon; AAA)

Eurowoes just keep mounting
Investors took what The Wall Street Journal called "a skeptical view" of a Spanish request for EU aid to bail out its banks. The country made its formal request for bank aid, but mentioned no specific sum outside of the previously stated maximum of $125 billion.

Spain's IBEX 35 Index ($ES:IB) fell 237 points to 6,639. Italy's FTSE MIB Index ($IT:FTSEMIB) dropped 542 points to 13,121.

It has been a day of complications for the European Union. This week's summit was expected to tackle a potential renegotiation of Greece's bailout terms and proposals to create a fiscal and banking union at the two-day summit, which starts Thursday in Brussels.

But Greek Prime Minister Antonis Samaras just had eye surgery and can't attend the meeting. And he's also looking for a new finance minister after Vassilis Rapanos resigned today. Rapanos also was having health problems.

Meanwhile, Cyprus formally requested aid from Europe’s bailout fund Monday as it scrambles to shore up its banking system, which has been hit by Greece’s debt crisis.

New-home sales show some life
New-home sales were up 7.6% in May from April to a seasonally adjusted annual rate of 369,000, the Commerce Department said. The rate was also up 19.8% from a year ago. The sales rate easily beat the consensus estimate of 345,000 units. 

Moreover, as Michael Darda, chief economist at MKM Partners, wrote in a client note, the fraction of sales coming from completed homes has hit a six-year low, while the monthly supply of new homes at the current sales pace has fallen to the lowest level since 2005. "These forces should help to reinforce a gradual recovery in pricing over time," he wrote.

But homebuilding stocks were lower. PulteGroup (PHM) was off 16 cents to $9.23. The Philadelphia Housing Sector Index ($HGX) fell 2.47 to 121.96.

Wal-Mart is the lone Dow stock in the black; financials and energy shares sag
Wal-Mart Stores (WMT) was alone among the 30 Dow stocks showing a gain today, rising 88 cents to $68.18.

Bank of America (BAC) was the biggest Dow decliner, down 34 cents to $7.60. It was hardly alone among bank stocks generally. JPMorgan Chase (JPM) was off 67 cents to $35.32. Citigroup (C) dropped $1.24 to $26.75. 

European bank stocks were harder hit in New York. French banking giant BNP Paribas (BNPQY) was off $1.07 to $17.48.  Deutsche Bank (DB) dropped $1.75 to $34.23.

Energy shares were hurt by the oil price drop, although they recovered some of their early declines as crude perked up.  Exxon Mobil (XOM) fell 87 cents to $81.24, and Chevron (CVX) was off $1.36 to $99.08.

Construction-equipme​nt manufacturer Caterpillar (CAT), which generates a sizable amount of revenue in Europe, was off $2.07 to $82.89 and contributed nearly 16 points to the Dow's loss.

Twenty-eight S&P 500 stocks were higher, led by Constellation Brands (STZ), up $2.49 to $21.86 following reports that Anheuser-Busch InBev (BUD) is close to a complete takeover of Mexican brewer Grupo Modelo. The bid for the 50% of Modelo it does not own is pegged at about $12 billion. Constellation distributes Corona and other imported beers in the United States in a joint venture with Modelo. Anheuser-Busch InBev was up 56 cents to $70.85.

Chesapeake Energy (CHK) was the S&P 500 laggard, down $1.58 to $17.03.

Chesapeake plotted with its top competitor to suppress land prices in one of America's most promising oil and gas plays, a Reuters investigation charged. In emails between Chesapeake and Encana (ECA), Canada's largest natural gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners.

Encana was off 82 cents to $19.04.

Only six Nasdaq-100 stocks showed gains. They were led by Randgold Resources (GOLD), Vodaphone (VOD) and Virgin Media (VMED). The laggard was Research In Motion (RIMM), down 75 cents to $9.11. The BlackBerry maker is expected to report a loss when it reports quarterly results after Thursday's close. The company said today it remains committed to its turnaround plan.

Short hits from the markets -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0800%			0.070%			14.29%			700.00%
5-year Treasury note			0.709%			0.751%			5.66%			-14.58%
10-year Treasury note			1.608%			1.672%			1.71%			-14.06%
30-year Treasury bond			2.682%			2.756%			0.37%			-7.17%
Currencies
U.S. Dollar Index			82.662			82.442			-0.56%			2.66%
British pound			1.5562			1.5593			0.96%			0.16%
(in U.S. $)
U.S. $ in pounds			£0.643			£0.641			-0.96%			-0.16%
Euro in dollars			$1.25			$1.26			1.05%			-3.60%
(in U.S. $)
U.S. $ in euros			€ 0.801			€ 0.796			-1.04%			3.73%
U.S. $ in yen			79.81			80.47			1.60%			3.51%
U.S. $ in Chinese			6.39			6.36			0.09%			0.96%
yuan
Canada dollar			$0.970			$0.975			0.19%			-1.10%
(in U.S. $)
U.S. dollar			$1.031			$1.026			-0.20%			1.10%
(in Canadian $)
Commodities
Gold (-GC)			$1,588.40			$1,566.90			1.55%			1.38%
(per troy ounce)
Copper (-HG)			$3.316			$3.306			-1.47%			-3.49%
(per pound)
Silver (-SI)			$27.5200			$26.6610			-0.85%			-1.42%
(per troy ounce)
Wheat (-ZW)			$7.2425			$6.7325			12.50%			10.95%
(per bushel)
Corn (-ZC)			$5.9400			$5.540			6.98%			-8.12%
(per bushel)
Cotton			$0.7005			0.6912			-2.10%			-23.59%
(per pound)
Coffee			$1.5875			1.559			-2.58%			-30.87%
(per pound)
Crude oil (-CL)			$79.21			$79.76			-8.46%			-19.85%
(per barrel)