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Stocks posted strong early gains Wednesday, but then reversed to a negative finish.
The late decline in the indexes coincided with a slide in the euro.The Nasdaq and the Dow fell 0.7% each. The S&P 500 dropped 0.6%, while the NYSE composite trimmed 0.5%. The Nasdaq had been up more than 2% early on.
Volume rose across the board.
Advancers led decliners by a 3-2 ratio on the NYSE and a 5-4 ratio on the Nasdaq.
At first, the market looked like it might get a break as economic data came in better than expected. Durable goods for April trounced expectations, and new-home sales in April also topped the Street's view.
Other developments also suggested a less bearish view.
China is signaling a looser stance on efforts to rein in its economic growth. That would be bullish for commodities and commodity-related stocks.
Bucyrus International (BUCY) and Joy Global (JOYG) — two heavy equipment makers that would benefit from strength in commodities — gained 2% each in heavy volume.
While a looser policy in China is regarded as helpful, unconfirmed reports Wednesday said China was reviewing its euro zone holdings. That sent the euro and U.S. stocks lower late in the day. But many say China is unlikely to dump euros because that would make the overall situation worse.
Some market watchers say the current fixation on European problems distorts clear thinking. They say the U.S. earnings picture is underappreciated, and the fears surrounding Europe are exaggerated as far as America is concerned. The troubled PIIGS nations — Portugal, Italy, Ireland, Greece and Spain — accounted for only 3% of U.S. exports in 2009.
Still, the market isn't buying that argument and remains in a correction. The major indexes have reversed sharply the past four sessions, indicating market uncertainty.
Until a follow-through day confirms an uptrend is under way, buying stocks is especially risky.
Underscoring that risk, the number of stocks scoring new highs remains disturbingly low. And the charts of top-rated issues suggest many stocks need more time to turn declines into bases.
After hours Wednesday, four stocks reported quarterly results. Retailers Rue21 (RUE), Dress Barn (DBRN) and Jo-Ann Stores (JAS) all topped the Street's view.
Rue21 and Jo-Ann rose after hours, while Dress Barn was flat. Data storage firm NetApp (NTAP) also topped estimates. It was up after hours.
