U.S. stocks post mild loss as euro moves dominate

Banks rise amid reform debate; manufacturing stocks drag down Dow average 
NEW YORK (MarketWatch) - U.S. stocks ended moderately lower Wednesday as investors wrestled with worries over the euro zone's debt woes and the potential impact on U.S. companies.

The Dow Jones Industrial Average (DJIA 10,416, -40.13, -0.38%), which was off 186 points at its session low, closed down 66.58 points, or 0.6%, at 10444.37.

The Dow's financial components were higher as the Senate took a vote on whether to end debate on a bill to overhaul Wall Street regulation. Bank of America Corp.(BAC 15.98, -0.33, -2.02%) rose 2.3%, American Express (AXP 39.88, -0.29, -0.72%) and J.P. Morgan Chase (JPM 38.55, -0.83, -2.11%) were up almost 1% each, and Travelers(TRV 49.86, -0.28, -0.56%) was up 0.6%. Read more on financial stocks and read latest on bank reform vote.

The euro recovered from a four-year low, reaching $1.2383, from $1.2210 late Tuesday in New York. It lost about 0.5% earlier in the day and has fallen nearly 10% against the U.S. dollar since the start of April on fears that the euro zone's economy will be slow to recover from its recent credit crisis. The U.S. dollar index(DXY 86.53, +0.14, +0.16%) fell more than 1%. See Currencies for more on euro, dollar.

Wednesday marked the first day of a new German ban on "naked" short-selling that exacerbated stock losses in U.S. and abroad. Read more on EU reaction to German ban.

London's FTSE 100 index closed down 2.8%, while Germany's DAX dropped 2.7% and the Stoxx Europe 600 tumbled 3%.Read Europe Markets.

The ban on the naked short selling of euro zone bonds, credit default swaps and 10 German financial companies has stoked investors' suspicions about Europe's ability to contain its debt crisis. Read more on drop in European CDS spreads.

"I think we'll have a lot of volatility related to events in the euro-zone for some time, but eventually it will die down as people get used to the way the policy makers there are dealing with things," said Axel Merk, president of currency-focused Merk Mutual Funds. "At some point, we'll begin to focus on where the next crisis might be.

Participants are concerned about how earnings of big U.S. multinational companies could be hurt if the euro keeps sliding. Caterpillar Inc. shares (CAT 59.17, -2.27, -3.70%)dropped 2.8%, Boeing (BA 64.54, -1.67, -2.52%) fell 2.2%, and DuPont(DD 35.90, -0.92, -2.50%) declined 0.7%.

Germany's ban on the naked short selling of euro-zone bonds, credit default swaps and certain equities will keep market suspicions about Europe aroused for a few days yet.

Among stocks to watch in the U.S., Deere (DE 57.02, -1.85, -3.14%) rose 3% after the company posted a 16% increase in fiscal second-quarter earnings on strong demand for its large machinery. The farm-equipment giant also raised its current-year earnings forecast. See full story on Deere earnings.

Hewlett-Packard(HPQ 45.90, -1.10, -2.34%) rose 0.5%. The company's fiscal second-quarter profit grew 28% on higher world-wide sales and profit growth in its core personal-computer business, where shipments jumped. Read more on H-P shares, results.

Crude for July delivery, the contract attracting the most interest and commitments from investors, declined 22 cents, or 0.3%, to settle at $72.48 a barrel. See Futures Movers for more on oil futures.

Gold futures declined for a second straight day, with the June contract ending down $21.50 at $1,193.10 per troy ounce.Read Metals Stocks for more on gold, platinum and palladium futures.

Treasury prices weakened, with the benchmark 10-year note slipping 2/32 to 3.361%. Read Bond Report.


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