U.S. stocks pulled back in a sleepy session Tuesday as investors paused after a three day rally that helped the market regain ground after several weeks dominated by unrest in the Middle East and Japan's earthquake. The Dow Jones Industrial Average fell 15 points, or 0.1%, to 12022 in light afternoon trading, while the Standard & Poor's 500-stock index fell four points to 1294 and the Nasdaq Composite fell seven points to 2685.
Leading the declines were industrial and consumer-discretionary stocks. Walgreen fell 6.5% to lead the S&P 500's decliners after the drugstore operator's second-quarter earnings disappointed some analysts, with Goldman Sachs saying the quarter would be viewed as a setback after two strong quarters.
Oil prices were also a concern for some investors, as crude-oil futures rose toward $105 a barrel. The broader pause comes after three days that saw the Dow gain 3.5% to trade above 12000 for the first time since the March 11 Japan earthquake, helped by encouraging geopolitical developments and corporate mergers such as AT&T's agreement to buy T-Mobile USA from Deutsche Telekom.
Trading on Tuesday remained in a narrow band of 48 points for the Dow, and volumes were light, with just 2.9 billion shares changing hands in New York Stock Exchange composite volume with less than an hour remaining. The biggest decliners among Dow components were General Electric and Bank of America, off 1.1% each, while Verizon Communications continued to benefit from the prospect of consolidation in the telecommunications industry. Verizon gained 1.3%, while AT&T slipped 0.6%.
European stocks fell Tuesday, ending a three-day winning streak, as cautious investors sold shares in engineering companies, car makers and retailer Metro AG. The Stoxx Europe 600 index slipped 0.2% to end at 271.83. Portugal's PSI 20 index posted particularly steep losses, closing down 1.5% as Portugal Telecom slumped 3.5% and Banco Espirito Santo fell 2.6%.
The losses came as Portugal's main opposition party signaled it won't support the government's call for additional austerity measures. A vote on the measures is expected Wednesday, and defeat could trigger the government's resignation. Portugal is widely seen as one of the euro-zone nations that may eventually need external financial aid in order to meet its obligations.
In France, the CAC 40 index dropped 0.3% to 3,892.71, led by a 2.7% fall for PSA Peugeot Citroen. Peugeot said late Monday that, as a result of the Japanese earthquake, part of its diesel-engine production will be affected because of an interruption of output at a supplier with a plant in the disaster zone. Other car makers also fell sharply. Renault SA sank 2.6%, Volkswagen AG fell 1.6% and BMW AG dropped 1.5%. U.K. engineering stocks were also weaker, including a 3.8% fall for GKN PLC and a 1.6% drop for Petrofac Ltd. The FTSE 100 index ended down 0.4% at 5,762.71.
In Frankfurt, shares of Metro dropped 4.7% after the supermarket operator reported a 33% rise in fourth-quarter profit, but also cautioned that unrest in the Middle East and North Africa, the Japanese earthquake and economic problems in parts of Europe could affect its earnings targets. The retailer was the biggest decliner on Germany's DAX 30 index, which closed down 0.5% at 6,780.97.
Japanese equities surged to lead Asian markets higher Tuesday as easing fears about an earthquake damaged nuclear power plant and low valuations after last week's sell-off lured investors back into stocks. Stocks rallied after Wall Street powered ahead for a third session overnight, even as markets remained wary of the Libyan crisis's impact on crude-oil prices. In Tokyo, the Nikkei Stock Average, which fell more than 10% last week, jumped 4.4% to end at 9608.32.
The buying came as several analysts called Japanese stocks undervalued after their recent tumble, with Berkshire Hathaway Inc. Chairman Warren Buffett suggesting the slump was a buying opportunity. Elsewhere, Hong Kong's Hang Seng Index rose 0.8% to 22857.90 and China's Shanghai Composite added 0.3% to 2919.14. South Korea's Kospi rose 0.5% to 2013.66, Taiwan's Taiex climbed 0.5% to 8508.04 and India's Sensex gained 0.8% to 17988.30. Leading stock gains in Japan, Tokyo Electric Power Co., the operator of the stricken Fukushima nuclear-power plant, jumped by its daily limit of 16% after soaring nearly 19% Friday.
Toshiba Corp. climbed 13% amid a broad buyback in consumer-electronics and nuclear-power-related shares, and after the Nikkei newspaper reported it plans to pay a fiscal-year-end dividend. The company issued a statement that it was merely considering one. Refining and petrochemical shares in and outside Japan posted broad gains on hopes that the loss of capacity caused by the earthquake and tsunami would boost demand from facilities that emerged intact. Shares of Showa Shell Sekiyu K.K. climbed 8.1% and Mitsui Chemicals Inc. rose 7.3%, while JX Holdings Inc. tacked on 12% after production resumed Monday at its quake-damaged Negishi refinery in Yokohama. Elsewhere in the region, S-Oil Corp. rose 2.5% and Korea Kumho Petrochemical Co. added 7.4% in Seoul. China Petroleum & Chemical Corp., or Sinopec, added 0.8% in Hong Kong
Base metals closed mostly higher on the London Metal Exchange Tuesday after keeping to recent ranges amid fairly benign trading. The exchange's three-month copper contract closed the day at $9,485 a metric ton, up 1% on Monday's PM kerb close, after briefly touching a high of $9,495/ton late in the session. Oil futures rose to their highest level since the March 11 earthquake in Japan, as fighting in Libya and tensions in the Middle East renewed worries about supplies. Light, sweet crude for April delivery settled up $1.67, or 1.6%, at $104 a barrel on the New York Mercantile Exchange.
With the expiration of the April contract, the more heavily traded May contract rose $1.88, or 1.8%, to settle at $104.97 a barrel. Brent crude on the ICE futures exchange settled up 74 cents, or 0.6%, at $115.70 a barrel. Prices advanced following reports of heavy fighting in Libya, where coalition forces received their first setback in their effort to establish a no-fly zone after a U.S. F-15 plane crashed in the northeast of the country. Gold and silver futures rose as a bounce in oil prices sent investors into the metals as an inflation hedge. The most actively traded gold contract, for April delivery, added $1.20 to settle at $1,427.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby March gold gained $1.30, to $1,427.50.
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