Reports of Greek austerity deal aid Dow

Updated: 8:25 p.m. ET

What looked like a disaster for stocks this morning turned into something of a draw at the close on reports that Greece, the European Monetary Union and the International Monetary Fund have agreed to a new austerity plan for the Mediterranean nation.

The news cheered investors and trimmed a loss for the Dow Jones industrials ($INDU) from nearly 235 points in the morning to just 60 points at 12,050. The Nasdaq Composite Index($COMPX), once down as many 41 points, finished up 18 points to 2,687. The Standard & Poor's 500 Index ($INX) was off 4 points to 1,284.

The market had plunged in the morning because of worries about the domestic and global economies.

Then, many traders were startled when the United States and other oil-consuming nations said they would put 60 million barrels of oil on the market to offset the removal from Libyan crude because of that country's civil war. That pushed crude oil (-CL) in New York to $91.02 a barrel, down 4.6% on the day and wiping out all of crude's gains for the year.

Gold (-GC) and silver (-SI) also fell as the dollar rose.

Only nine of the 30 Dow stocks were higher, led by Home Depot (HD), Pfizer (PFE) and Intel (INTC). Decliners were ahead of gainers 1.4-to-1 on the New York Stock Exchange. But the big rebound helped gainers beat decliners 1.2-to-1 on the Nasdaq system.

Article continues below.A rebound in shares of Apple (AAPL) boosted the Nasdaq. Apple was up 2.7% to $331.23 after falling to as low as $318.12 right on the open.

That set off the Nasdaq's rebound and pushed the Nasdaq-100 Index ($NDX.X) into the black on the day. The Nasdaq-100, which tracks the largest Nasdaq stock, was up 19 points to 2,255. Apple contributed nearly 7.5 points to the index's gain.

Adding to the morning pressure on stocks was news that House Majority Leader Eric Cantor, R-Va., said he was pulling out of budget talks with Vice President Joe Biden, saying they were at an impasse.

Futures trading anticipated late Thursday that stocks will open higher on Friday.

Oracle results disappoint
After the close, shares of tech giant Oracle (ORCL) were off nearly 4.2% to $31.10 from a regular close of $32.46.

The company beat Street estimates on fiscal-fourth-quarte​r earnings, but sales of computer hardware fell 6% to $1.2 billion. That surprised investors. At the same time, software sales were up 19% to $3.7 billion.

Oracle said it earned 75 cents a share, after one-time charges, on revenue $10.8 billion. The Street had expected 71 cents. Revenue of $10.8 billion was up 13% from a year ago but only in line with Street estimates.

Radio Shack (RSH) shares were unchanged at $13.20 after hours. Standard & Poor's said late today the stock will be replaced in the S&P 500 after June 30 by Marathon Petroleum, which is being spun off by Marathon Oil (MRO). Radio Shack will be part of the S&P Midcap-400Index ($MID.X).

Energy prices -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Crude oil (-CL)			$91.02			$95.41			-11.37%			-0.39%
(per barrel)
Heating oil (-HO)			$2.78			$2.95			-8.89%			9.36%
(per gallon)
Natural gas (-NG)			$4.193			$4.32			-10.14%			-4.81%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.84			$2.97			-9.93%			15.67%
(per gallon)
Brent crude			$107.26			$114.21			-8.11%			13.20%
(per barrel)
Retail gasoline			$3.61			$3.63			-4.44%			17.58%
(per gallon; AAA)

Potential new supplies slam crude prices
Light sweet crude oil, the benchmark U.S. oil, settled down $4.39, or 4.6%, to $91.02 a barrel, the lowest close since Feb. 18. Brent crude, the benchmark North Sea oil, fell $6.95, or 6.1%, to $107.26 a barrel.

The price drops came on word that the United States was leading an international effort to release 60 million barrels of petroleum reserves to world markets, replacing some of the production lost because of the conflict in Libya. The sellers were probably hedge funds that had used low interest rates to load up on oil or oil futures.

The news came as "a bolt out of the blue," said Alec Young, equity strategist at Standard & Poor's, and amplified the effect on energy stocks, which were the weakest sector of the stock market. Cynics suggested the move was politically motivated.

But there was something more to the move, noted oil consultant Peter Beutel of Cameron-Hanover. The move by the U.S. and the European Union, he wrote clients after today's close, "put traders on notice that they are willing to release oil and can alter the supply dynamics. OPEC (the Organization of Petroleum Exporting Countries) is not the only source of additional barrels of oil."

Exxon Mobil (XOM) was down 1.7% to $78.44. Chevron (CVX) was off 1.7% to $99.36. The two stocks represent 5% of the value of the S&P 500 by themselves, Young noted.

The Energy Select Sector SPDR exchange-traded fund (XLF), which tracks the S&P 500 energy sector, was off 1.1% to $72.30. The ETF is off 10.2% from a closing high of $80.48 on April 29.

The U.S. will release 30 million barrels from its Strategic Petroleum Reserve, which now has some 727 million barrels stored in salt caverns along the Texas and Louisiana coasts. Rising oil prices since midwinter have depressed consumer spending in the United States and elsewhere.

Crude prices shot up starting in February with the eruption of what is basically a civil war in Libya. That shut in Libyan production entirely, taking 1.6 million barrels of low-sulfur crude a day off global markets.

That led to heavy speculation in crude oil futures, particularly Brent crude, the benchmark North Sea crude. Brent peaked at about $127 a barrel on April 8.

Gold settled down $31.80, or 2.1%, to $1,521.60 an ounce and was hovering at that level in electronic trading. Silver was off $1.589 to $35.15 an ounce but was rising after hours. Copper was down 4.1 cents to $4.0475 a pound.

The dollar shot up against the euro and the British pound. Interest rates fell, with the 10-year Treasury yield at 2.909%, down from Wednesday's 2.993%.

We should note that one group of stocks gained from today's energy turmoil: airlines. American Airlines parent AMR (AMR) jumped 5.2% to $6.05. United Continental Holdings (UAL) closed up 4.8% to $25.14.

Wholesale gasoline dropped 13 cents to $283.76 and should push retail prices lower. A penny drop in gas prices returns $40 million a day to U.S. consumers -- or nearly $1.5 billion a year.

Bernanke's worries weigh early on markets
The market was held down by energy and materials stocks, which tend to fall when the dollar rises. And the potential for lower global growth was a heavy weight on the market. Boeing (BA), the largest U.S. exporter, Chevron and Exxon Mobil themselves were responsible for about 30 points of the Dow's loss.

The early sell-off was clearly an extension of the downturn that hit stocks after Bernanke said the problems plaguing the U.S. economy "may be stronger and more persistent" than originally thought. However, he gave no indication the central bank will back another monetary stimulus after the current $600 billion program runs out at the end of the month.

Japanese and European stocks were lower.

Today's jobless claims report confirmed Bernanke's point. The government said claims last week were a seasonally adjusted 429,000, up from 420,000 a week earlier and the 11th week in a row where the widely watched number was above 400,000.

The economy has been giving ground of late to continued weakness in residential real estate, high jobless rates and the broad effects of the March earthquake in Japan on businesses around the world.

A small gain in new-home sales
There was a touch of good news -- a report showing new-home sales fell 2.1% to a seasonally adjusted annual rate of 319,000 units. That was slightly better than expected and up 13.5% from May 2010's rate of 281,000 units. The inventory of new homes for sale was 166,000, a 6.2-month supply, and down 23% from a year ago.

The reason the number is just a touch of good news is that new-home sales have averaged 678,000 units a year since records were first tabulated in 1963. Moreover, the May reports shows sales running at 23% of the peak level in 2005.

Nonetheless, the report boosted homebuilding shares. Lennar (LEN), which reported better-than-expected​ second-quarter profits, was up 2.3% to $18.51. Ryland (RYL) ended up 2.9% to $17.65. Pultegroup (PHM) had added 1.2% to $7.58.

Manufacturing weakens in China and Europe

Global economic growth was also in question following weak readings on separate purchasing managers’ surveys for China and in continental Europe.

Sluggish growth in Europe was particularly difficult for the market to swallow as eurozone leaders struggle with ways to stabilize Greece. On Thursday, European Central Bank President Jean-Claude Trichet rated risks to financial stability in the eurozone as "red," according to a Bloomberg report.

Short hits from the markets -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.01%			0.01%			-80.00%			-91.67%
5-year Treasury note			1.45%			1.54%			-13.98%			-27.98%
10-year Treasury note			2.91%			2.99%			-4.56%			-11.92%
30-year Treasury bond			4.16%			4.22%			-1.30%			-4.61%
Currencies
U.S. Dollar Index			75.904			75.188			1.62%			-4.27%
British pound			$1.59			£1.61			-3.16%			2.20%
(in U.S. $)
U.S. $ in pounds			£0.63			£0.62			3.26%			-2.15%
Euro in dollars			$1.41			$1.43			-2.02%			5.70%
(in U.S. $)
U.S. $ in euros			€ 0.71			€ 0.70			2.06%			-5.39%
U.S. $ in yen			80.84			80.30			-0.97%			-0.65%
U.S. $ in Chinese			6.49			6.46			-0.19%			-1.90%
yuan
Canada dollar			$1.019			$1.027			-1.47%			1.55%
(in U.S. $)
U.S. dollar			$0.982			$0.982			1.48%			-1.52%
(in Canadian $)
Commodities
Gold (-GC)			$1,520.50			$1,553.40			-1.06%			6.97%
(per troy ounce)
Copper (-HG)			$4.041			$4.088			-3.27%			-9.13%
(per pound)
Silver (-SI)			$35.0020			$36.7390			-8.62%			13.14%
(per troy ounce)
Wheat (-ZW)			$6.4900			6.3825			-17.03%			-18.29%
(per bushel)
Corn (-ZC)			$6.8050			6.775			-8.96%			9.32%
(per bushel)
Cotton			$1.6455			1.6122			3.71%			13.63%
(per pound)
Coffee			$2.4770			2.4375			-6.39%			2.99%
(per pound)
Crude oil (-CL)			$91.02			$95.41			-11.37%			-0.39%
(per barrel)