Wall Street slips as Greece woes linger

By @ibtimes on

U.S. stocks slipped on Wednesday on worries that Greece's debt crisis could spread to other euro zone nations, but losses were capped as investors looked for bargains a day after a hefty sell-off.

Doubts about Europe's plan to rescue Greece and fears the debt problems could hinder global growth drove investors to safe-havens, boosting U.S. Treasuries and driving down European stocks and the euro.

European leaders warned the euro zone debt crisis could spread beyond Greece, and Moody's Investors Service said Portugal could be next to have its debt downgraded.

In a potentially positive sign, the German parliament's budget committee approved a draft law on Germany's contribution to a financial aid package for Greece. The news coincided with stocks trimming some of their earlier losses.

Wall Street's losses were modest after Tuesday's more than 2 percent decline. Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles, said traders were looking for buying opportunities generated by the volatility.

Bigger picture, U.S. investors continue to be of the opinion that corrections are to be bought, said James.

Gains in big-cap consumer staples names supported the Dow, including retailer Wal-Mart , up 1.5 percent at $54.83 as it rose for a second straight day, and Coca-Cola Co ,up 0.8 percent to $53.62.

The Dow Jones industrial average <.DJI> fell 37.34 points, or 0.34 percent, to 10,889.43. The Standard & Poor's 500 Index <.SPX> eased 4.86 points, or 0.41 percent, to 1,168.74. The Nasdaq Composite Index <.IXIC> lost 18.63 points, or 0.77 percent, to 2,405.62

Declining stocks ruled, beating advancers by 3 to 1.

Data on the U.S. private sector job market and the economy's services sector were generally positive and cushioned the negative tone.

The Institute for Supply Management said the pace of growth in the U.S. services sector, which accounts for some two-thirds of U.S. economic activity, was unchanged in April compared with March, while a separate report showed the U.S. private labor sector added 32,000 jobs in April.

Worries that Greece's debt crisis could spread were underscored as a senior Moody's analyst said the ratings agency is more likely to downgrade Portugal's credit rating after putting it on a three-month review on Wednesday. Moody's had first put the country on negative outlook last year.

Protests in Greece against the government's planned austerity plan turned violent on Wednesday. Protesters clashed with police as tens of thousands of strikers marched, and three people died when rioters set a central Athens bank ablaze.

The flight from risky assets pushed up the U.S. dollar <.DXY>, considered a safe-haven investment, and the greenback gained 0.7 percent against a basket of major currencies.

Materials and industrial stocks, sensitive to the outlook of global economic growth, weighed on the market. Energy shares were also pressured as the price of oil fell more than $2 to $80.53 a barrel.

The S&P Energy Index <.GSPE> was down 1 percent and Chevron Corp shares eased 0.6 percent to $80.27.

(Editing by Leslie Adler)

Join the Discussion