Stocks Slip On Wall Street As Greek Talks Drag On

Published February 6, 2012 7:27PM (EST)

NEW YORK (AP) — Stocks edged lower in afternoon trading Monday as talks dragged on between Greek political leaders over a fresh austerity package required for the country to get more bailout loans.

President Nicolas Sarkozy of France and German Chancellor Angela Merkel warned Greek leaders that they need to push through new reforms or risk letting the country go bankrupt. Greece is hoping the European Central Bank, the International Monetary Fund and the European Commission will release a second installment of $170 billion in loans. Without that money, Greece will likely default when a bond repayment comes due March 20.

In Greece, talks between the prime minister and leaders of parties backing his coalition government were postponed for a day, even as European leaders prodded the government to push through new spending cuts, layoffs and other austerity measures.

The Dow Jones industrial average fell 49 points to 12,813 as of 2 p.m. Eastern time. Travelers Cos. Inc. led the Dow lower with a 1.5 percent decline.

In other trading, the Standard & Poor's 500 index fell 4 points to 1,341. The Nasdaq composite fell 7 points to 2,897.

Sam Stovall, chief equity strategist at S&P Capital IQ, thinks investors are starting to wonder if the stock market's recent stretch of calm trading is a prelude to a big drop. Trading has turned subdued compared with the wild swings of 2011. The S&P has closed up or down by more than 1 percent only three times this year. In December, that happened nine times.

"I look at it like a very-low-tide warning of an impending tsunami," Stovall said. "We're setting ourselves up for a decline, the sort of decline that would make you sit up and take notice."

A worrisome sign, Stovall said, is a drop in the number of volatile trading days in which the S&P index ends lower. There have been only five days in the last month in which the S&P index has moved by more than 1 percent and then ended with a loss. That's half of the monthly average since 2000. On April 29, for instance, the S&P 500 hit its peak for the year after an even calmer period, then lost 19 percent before hitting bottom on Oct. 3.

Stocks surged Friday after a surprisingly good U.S. employment report. Large gains in the market are often followed by modest moves as traders pull some of their winnings off the table. Since 1950, whenever the S&P rose by 1 percent or more in a trading day, the index has inched up an average of just 0.1 percent the next day, according to S&P Capital IQ.

Among companies making big moves:

— Boeing Co. fell 1.3 percent following reports that the company found a problem in its 787 Dreamliner. The aircraft maker said it was working to fix it and that there was no safety concern.

— Micron Technology Inc. fell 1 percent following news that the chip maker's CEO died in a plane crash. Steve Appleton, 51, was at the helm for 18 years, leading the only company he'd ever worked for.

— Humana dropped 5.8 percent, the biggest loss in the S&P 500 index. The health insurance company reported revenue that fell short of analysts' expectations. Humana also raised its earnings outlook for 2012 but that, too, was below analysts' forecast.

By Salon Staff

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